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Using High-Low to Calculate Predicted Total Variable Cost and Total Cost for a Time Period...

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Accounting

  1. Using High-Low to Calculate Predicted Total Variable Cost and Total Cost for a Time Period that Differs from the Data Period

    Pizza Vesuvio makes specialty pizzas. Data for the past 8 months were collected:

    Month Labor Cost Employee Hours
    January $7,000 380
    February 9,899 570
    March 8,140 680
    April 9,787 630
    May 8,490 500
    June 7,531 370
    July 9,490 590
    August 7,450 330

    Assume that this information was used to construct the following formula for monthly labor cost.

    Total Labor Cost = $6,800 + ($1.97 X Employee Hours)

    Required:

    Assume that 3,800 employee hours are budgeted for the coming year. Use the total labor cost formula to make the following calculations:

    1. Calculate total variable labor cost for the coming year. Round your answer to the nearest dollar. $

    2. Calculate total fixed labor cost for the coming year. Round your answer to the nearest dollar. $

    3. Calculate total labor cost for the coming year. Round your answer to the nearest dollar. $

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