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Using High-Low to Calculate Fixed Cost, Calculate the Variable Rate, and Construct a Cost Function...

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Accounting

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Using High-Low to Calculate Fixed Cost, Calculate the Variable Rate, and Construct a Cost Function Pizza Vesuvio makes specialty pizzas. Data for the past 8 months were collected: Month Labor Cost($) Employee Hours January 9,790 290 February 7,300 330 March 7,831 April 8,440 350 260 310 May 10,087 June 8,790 240 July 10,788 400 August 7,800 220 Pizza Vesuvio's controller wants to calculate the fixed and variable costs associated with labor used in the restaurant. In your calculations, round the variable rate per employee hour to the nearest cent. If required, round your final answers to the nearest cent Required: 1. Using the high-low method, calculate the fixed cost of labor. NU 2. Using the high-low method, calculate the variable rate. per employee hour 3. Using the high-low method, construct the cost formula for total labor cost. Total labor cost = $ + ($ Employee hours)

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