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Construct the cost formula for total labor cost

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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:

Month Labor 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.

Reference no: EM132708594

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