Reference no: EM132368082

Question :

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         $7,300                      410

February       10,199                      600

March              8,440                      720

April              10,087                      660

May              8,790                      530

June                7,831                      400

July                 9,790                      620

August          7,750                      360

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

Total Labor Cost = $7,059 + ($1.92 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.