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Using High-Low to Calculate Predicted Total Variable Cost and Total Cost for Budgeted Output Refer to the information for Pizza Vesuvio on the previous page. Assume that this information was used to construct the following formula for monthly labor cost. Total Labor Cost = $ 5 , 237 + ( $ 7.40 × Employee Hours) Required: Assume that 675 employee hours are budgeted for the month of September. Use the total labor cost formula for the following calculations: 1. Calculate total variable labor cost for September. 2. Calculate total labor cost for September.

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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
Publisher: Cengage Learning
ISBN: 9781337115773
BuyFind

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
Publisher: Cengage Learning
ISBN: 9781337115773

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Chapter
Section
Chapter 3, Problem 18BEA
Textbook Problem
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Using High-Low to Calculate Predicted Total Variable Cost and Total Cost for Budgeted Output

Refer to the information for Pizza Vesuvio on the previous page. Assume that this information was used to construct the following formula for monthly labor cost.

Total Labor Cost =  $ 5 , 237 + ( $ 7.40 × Employee Hours)

Required:

Assume that 675 employee hours are budgeted for the month of September. Use the total labor cost formula for the following calculations:

  1. 1. Calculate total variable labor cost for September.
  2. 2. Calculate total labor cost for September.

Expert Solution

1.

To determine

Compute the value of total variable labor costs for the month of September.

Explanation of Solution

Variable Cost:

Variable cost is the cost which varies due to the changes in the level of output to produce products and services in a relevant range.

Use the following formula to calculate total variable labor costs for the month of September:

Total Variable Labor Costs=Variable Rate×Employee Hours

Substitute $7

Expert Solution

2.

To determine

Compute the value of total labor costs for the month of September.

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Chapter 3 Solutions

Managerial Accounting: The Cornerstone of Business Decision-Making
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