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Cost Behavior Analysis in a Restaurant- Hi Low Estimation E 15-21 a,b, c

6 Which What factors might have caused the difference in the equalNIS UOVCOUTUI TULIITEIS (a) and d. Adjust the equation developed in requirement (b) to incorporate the effect of an anticipated 80 increase in wages. E15-21. Cost Behavior Analysis in a Restaurant: High-Low Cost Estimation Assume a Potbelly's restaurant has the following information available regarding costs at representa tive levels of monthly sales: ma? ISM Selecting Beer Coa improve threr var ship wit Mon Cost of food sold ....... Wages and fringe benefits ........ Fees paid delivery help.. Rent on building......... Depreciation on equipment. Utilities ......... Supplies (soap, floor wax, etc.) Administrative costs.. Total .. Monthly sales in units 5,000 8,000 10,000 $10,000 $16,000 $20,000 4,200 4,320 4,400 1,100 1,760 2,200 1,100 1,100 1,100 900 900 900 800 920 1,000 250 340 400 1,700 1,700 1,700 $20,050 $27,040 $31,700 May Juni Required a. Identify each cost as being variable, fixed, or mixed. b. Use the high-low method to develop a schedule identifying the amount of each cost that is mixed or variable per unit. Total the amounts under each category to develop an equation for total monthly costs. e. Predict total costs for a monthly sales volume of 9,800 units. 15-22. Developing an Equation from Average Costs Paradise Pup is a high-end dog hotel located in New York. Assume that in March, when dog-days pancy was at an annual low of 500 days, the average cost per dog-day was $26 when dog were at panacity level of 4 500 the average cost per dog-day was SIO

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