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 9,790 360 February 7,300 420 March 7,831 450 April 8,440 340 May 10,087 390 June 8,790 310 July 11,496 500 August 7,800 280 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. | per employee hour 3. Using the high-low method, construct the cost formula for total labor cost. Total labor cost - |× Employee hours)

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
9,790
360
February
7,300
420
March
7,831
450
April
8,440
340
May
10,087
390
June
8,790
310
July
11,496
500
August
7,800
280
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.
| per employee hour
3. Using the high-low method, construct the cost formula for total labor cost.
Total labor cost -
|× Employee hours)
View transcribed image text
Expand

Expert Answer

Want to see the step-by-step answer?

Check out a sample Q&A here.

Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

*Response times may vary by subject and question complexity. Median response time is 34 minutes for paid subscribers and may be longer for promotional offers.
Tagged in
Business
Accounting

Cost allocation and revenues

Related Accounting Q&A

Find answers to questions asked by students like you.

Q: Refer to the situation described in BE 5–31. Assume that, during the first year the company billed i...

A: Given that the company billed its customer $ 7million out of which $5 million was collected before y...

Q: Gem Limited commences operations on 1 January 2019. During 2019 Gem Limited explores threeareas and ...

A: Click to see the answer

Q: Determine the timing of revenue recognition with respect to licenses, franchises,and other common ar...

A: Revenue Recognition for Licenses: Revenue should be recognised over time for right of access and at ...

Q: (Stock Dividend, Cash Dividend, and Treasury Stock) Mask Company has30,000 shares of $10 par value c...

A: a. Following are the journal entries for purchase and sale and the effect of treasury stock in balan...

Q: On September 30, 2018, the San Fillipo Corporation issued 8% stated rate bonds with a face amount of...

A: Given information is: On September 30, 2018, the San Fillipo Corporation issued 8% stated rate bonds...

Q: Dresser Company’s weekly payroll, paid on Fridays, totals $8,000. Employees work a 5-day week. Prepa...

A: Given information is: Dresser Company’s weekly payroll, paid on Fridays, totals $8,000. Employees wo...

Q: I don't know why I got this wrong

A: Dividend is issued to the shareholders mainly in two forms - cash and shares.

Q: Trak Corporation incurred the following costs while manufacturing its bicycles. Bicycle component...

A: Given information is: Trak Corporation incurred the following costs while manufacturing its bicycles...

Q: Service Department Charges and Activity Bases Middler Corporation, a manufacturer of electronics and...

A: Cost per activity = Total cost / Total activity

Q: When making the determination of whether or not a selling price should be increased there are many d...

A: For a cost-volume profit analysis, we need to first determine the unit selling price and variable co...

Q: Presented below are incomplete manufacturing cost data.Determine the missing amounts for three diffe...

A: Direct materials are those materials that used while manufacturing a product and which are identifia...

Q: Schedule of Cash Collections on Accounts Receivable and Cash Budget Roybal Inc. sells all of its pro...

A: 1.  Prepare a schedule of cash receipts for July: Roybal Inc. Schedule of Cash Receipts For Ju...

Q: The correction of a material error discovered in a year subsequent to the year the error was made is...

A: A prior period adjustment is the correction of an accounting error that occurred in the past and was...

Q: a company reports the following sales related information sales,gross $200,000 sales returns and ...

A: Net sales = Gross sales - sales returns and allowances - sales discounts

Q: Examine Note 4.1.1 of AF’s annual report. What accounting principles were used to prepare AF’s finan...

A: According to Note 4.1.1 Accounting principles used for consolidated financial statement have been pr...

Q: Accounting Question

A:  Inventory turnover ratio is computed by dividing the cost of goods sold by average inventory. Avera...

Q: What transactions are included in income from continuing operations? Briefly explain why it is impor...

A: Income from continuing operations includes the revenue, expense, gain, and loss transactions that wi...

Q: At 30 June 2019, Beta Ltd had the following deferred tax balances:   Deferred tax liability         ...

A: Click to see the answer

Q: What will be the effects of Partnership Allocations and Substantial Economic?

A: Substantial Economic Effect The partnership allocation might not be fulfilled and complete if the el...

Q: On January 1, 2018, Lego Construction Company signed a contract to build a custom garage for a custo...

A: Given information is: On January 1, 2018, Lego Construction Company signed a contract to build a cus...

Q: Explain how to account for revenue on a long-term contract over time as opposed to at a point in tim...

A: If a long term contract qualifies for revenue recognition over time, the seller recognises a portion...

Q: Use the horizontal model, or write the journal entry, for each of the following transactions and adj...

A: Definition: Journal entry: Journal entry is a set of economic events that can be measured in monetar...

Q: Define the term effective rate.

A: The effective rate is the real return on a savings account or any interest-paying investment when th...

Q: Describe dropping unprofitable products or segments.

A: Dropping unprofitable products or segments means discontinue a particular product or segment which i...

Q: Lewis Co. sold merchandise to AdCo for $60,000 and received $60,000 for that sale one month later. O...

A: Given information is: Lewis Co. sold merchandise to AdCo for $60,000 and received $60,000 for that s...

Q: A public agency is obliged to purchase a compressor with an economic life of 10 years or by leasing ...

A: Decision making is a process of selecting the best available option among the available alternatives...

Q: Fiona Sporty uses a purchases journal, a cash payments journal, a sales journal, a cash receipts jou...

A: In order to record specific high volume transactions, five special journals are used. They are  1. C...

Q: Periodic billings to the customer for a long-term construction contract are recorded as billings on ...

A: Given information is: Periodic billings to the customer for a long-term construction contract are re...

Q: Sembotix Company has several divisions including a Semiconductor Division that sells semiconductors ...

A: To understand the mechanics of cost and profit, we first need to understand two different types of c...

Q: Sensational Soft Drinks makes three products: iced tea, soda, and lemonade. The following data are a...

A: Contribution margin per bottleneck hour = Contribution margin per unit / Bottleneck process hours pe...

Q: I only need the answer to question 2

A: Tax: Tax refers to a compulsory payment or a contribution to the state revenue, levied by the gover...

Q: 1)Starling Co. is considering disposing of a machine with a book value of $21,600 and estimated rema...

A: Increase (decrease) in  income = Savings in total annual variable manufacturing costs - Net investme...

Q: What is the effect of an increase in variable costs as a percentage of sales onthe contribution marg...

A: Variable cost refers to the cost which varies according to the volume of produced units. Increase in...

Q: : A. Explain Differences between Accountancy and Auditing B. Talk about the Disadvantages of the Occ...

A: Since you have asked multiple question, we will solve the first question for you. If you  want any s...

Q: On 1 June, Mason and Boyce had Accounts Receivable and Allowance for Doubtful Debts accounts as belo...

A: Click to see the answer

Q: The T-accounts for Equipment and the related Accumulated Depreciation—Equipment for Luo Company at t...

A: Here,  Book value of disposals of Equipment = $20700 Accumulated Depreciation on disposed equipment ...

Q: Fujitsu Ltd purchases inventory from DFO Ltd, a listed British company. Relevant events and the spot...

A: a. The journal entries for each of the events are as follows:  

Q: At the end of the current year, Accounts Receivable has a balance of $840,000; Allowance for Doubtfu...

A: Click to see the answer

Q: jThe treasurer of Miller Co. has readnon the Internet that the stock price ofWade Inc. is about to t...

A: Hi student  Since there are multiple sub parts in the question, we will answer only first three sub ...

Q: what is accounting

A: Accounting: Accounting is a system, or a process of collecting and organizing economic transactions,...

Q: Big Construction Company signs a contract on 1 July 2019, agreeing to build a warehouse for Buyer Co...

A: Introduction:   IFRS 15 Revenue from contract with customers uses a five step model for revenue rec...

Q: 11. The credit that appears in the account of goods or articles in process represents A. direct mate...

A: Process costing is a method of cost allocation where the cost is assigned to each function or a proc...

Q: Below is information about Lisa Ltd’s cash position for the month of June 2019.  1. The general ledg...

A: The journal for cash payments and cash receipts is as follows: The amount of total cash receipts an...

Q: Barbara was a regular shopper at Egeeay Supermarket, which was part of a large nationwidesupermarket...

A:  a) Yes. Supermarket Egeeay owes Barbara a custodial duty. Because the shop is responsible for guara...

Q: Who needs to be involved in assessing the cost of customers waiting for service if the customers are...

A: Service Costing:   It is a costing procedure used for finding the cost per unit of service rendered.

Q: Show the calculation of the following activity ratios: (1) the receivables turnover ratio, (2) the i...

A: Ratio analysis: The analysis of a company using the financial ratios and comparing its trends and me...

Q: Question: Banksia Company completed the following transactions during 2018-2019. The annual accounti...

A: 1) Prepare the journal entries for each of these transactions. Journal entry: Journal entry is a se...

Q: You are currently working in a mid-tier accounting firm. In an engagement meeting with a client, the...

A: When the auditor is free to perform his roles, then the audit agreement can be accepted. An auditor ...

Q: The CIO and MD have different views on how the system analysis should be performed. Comment on whose...

A: Managerial accounting: Managerial accounting is more focused towards analyzing information and repor...

Q: Which of the following would be considered a sunk cost? a. purchase price of new equipment b. wareh...

A: Sunk Costs: Sunk costs are those costs incurred in the past and it cannot be changed unless if any f...

Transcribed Image Text

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 9,790 360 February 7,300 420 March 7,831 450 April 8,440 340 May 10,087 390 June 8,790 310 July 11,496 500 August 7,800 280 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. | per employee hour 3. Using the high-low method, construct the cost formula for total labor cost. Total labor cost - |× Employee hours)