Textbook Problem

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

Refer to the information for Pizza Vesuvio on the previous page. Coefficients shown by a regression program for Pizza Vesuvio’s data are:

Required:

Use the results of regression to make the following calculations:

1. 1. Calculate the fixed cost of labor and the variable rate per employee hour.
2. 2. Construct the cost formula for total labor cost.
3. 3. Calculate the budgeted cost for next month, assuming that 675 employee hours are budgeted. (Note: Round answers to the nearest dollar.)

Use the following information for Brief Exercises 3-17 through 3-20:

Pizza Vesuvio makes specialty pizzas. Data for the past 8 months were collected: