FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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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($)
Employee Hours
January
February
March
April
May
June
July
August
9,690
7,200
7,731
8,340
9,987
8,690
13,508
7,700
7
530
620
660
490
570
450
740
410
Pizza Vesuvio's controller wants to calculate the fixed and variable costs associated with labor used in the restaurant.
In your calculations, round the variable rate per employee hour to the nearest cent. If required, round your final answ
nearest cent.
Required:
1. Using the high-low method, calculate the variable rate.
per employee hour
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Transcribed Image Text:Using High-Low to Calculate Fixed Cost, Calculate the Variable Rate, and Construct a Cost Function Pizza Vesuvio makes specialty pizzas. Data for the past 8 months were collected: Month Labor Cost($) Employee Hours January February March April May June July August 9,690 7,200 7,731 8,340 9,987 8,690 13,508 7,700 7 530 620 660 490 570 450 740 410 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 answ nearest cent. Required: 1. Using the high-low method, calculate the variable rate. per employee hour
Required:
1. Using the high-low method, calculate the variable rate.
per employee hour
2. Using the high-low method, calculate the fixed cost of labor.
3. Using the high-low method, construct the cost formula for total labor cost.
x Employee hours)
Total labor cost = $
+($
expand button
Transcribed Image Text:Required: 1. Using the high-low method, calculate the variable rate. per employee hour 2. Using the high-low method, calculate the fixed cost of labor. 3. Using the high-low method, construct the cost formula for total labor cost. x Employee hours) Total labor cost = $ +($
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