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Managerial Accounting: The Corners...

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

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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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:

Chapter 3, Problem 20BEA, Using Regression to Calculate Fixed Cost, Calculate the Variable Rate, Construct a Cost Formula, and , example  1

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:

Chapter 3, Problem 20BEA, Using Regression to Calculate Fixed Cost, Calculate the Variable Rate, Construct a Cost Formula, and , example  2

1.

To determine

Compute the value of labor fixed cost and the variable rate per employee hour.

Explanation

Cost:

Cost can be defined as the cash and cash equivalent which is incurred against the products or its related services which will benefit the organization in the future. There are two types of costs that are fixed and variable costs.

Fixed cost of labor is $4,517...

2.

To determine

Prepare the cost formula for total labor cost.

3.

To determine

Compute the value of budgeted labor costs for next month, if 675 employee hours are budgeted.

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