How do calculate the variable rate per employee hour

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Reference no: EM132661976

Using Regression to Calculate Fixed Cost, Calculate the Variable Rate,
Construct a Cost Formula, and Determine Budgeted Cost

Pizza Vesuvio makes specialty pizzas. Vesuvio's controller wants to calculate the fixed and variable costs associated with labour used in the restaurant. Data for the past eight months were collected:

Month Labor Cost ($) Employee Hours

January 7,000 360

February 8,140 550

March 9,010 585

April 9,787 610

May 8,490 480

June 2,450 350

July 9,490 570

August 7,531 310

Coefficients shown by a regression program for this data are:

Intercept1,145X Variable13.82

Required:

Use the results of regression to do the following:

Question 1. Calculate the fixed cost of labor. Calculate the variable rate per employee hour. Round your answer to two decimal places.
$per employee hour

Question 2. Construct the cost formula for total labor cost. Round variable rate to two decimal places.
Total labor cost = $ + ($ × Employee hours)

Question 3. Calculate the budgeted cost for next month, assuming that 675 employee hours are budgeted.

Reference no: EM132661976

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