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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 eight months were collected:
| | Month | Labor Cost | Employee Hours |
| | January | | $6,900 | | | 330 |
| | February | | 8,040 | | | 520 |
| | March | | 9,799 | | | 610 |
| | April | | 9,687 | | | 580 |
| | May | | 8,390 | | | 450 |
| | June | | 7,350 | | | 320 |
| | July | | 9,390 | | | 540 |
| | August | | 7,431 | | | 280 |
Assume that this information was used to construct the following formula for monthly labor cost.
| Total Labor Cost = $5421 + ($7.18 X Employee Hours) |
Required:
Assume that 3,900 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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