Reference no: EM132738311
Question: 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:
MonthLabor Cost($)Employee Hours January 9,490 420 February 7,000 480 March 7,531 510 April 8,140 380 May 9,787 450 June 8,490 350 July 11,972 580 August 7,500 320
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.
2. Using the high-low method, calculate the variable rate.
3. Using the high-low method, construct the cost formula for total labor cost.
Total labor cost = $ + ($ × Employee hours)
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