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Using High-Low to Calculate Predicted Total Variable Cost and Total Cost for a Time Period...

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Accounting

Using High-Low to Calculate Predicted Total Variable Cost and Total Cost for a Time Period that Differs from the Data Period

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

Month Labor Cost Employee Hours
January $6,900 330
February 8,040 520
March 9,799 610
April 9,687 580
May 8,390 450
June 7,350 320
July 9,390 540
August 7,431 280

Assume that this information was used to construct the following formula for monthly labor cost.

Total Labor Cost = $5421 + ($7.18 X Employee Hours)

Required:

Assume that 3,900 employee hours are budgeted for the coming year. Use the total labor cost formula to make the following calculations:

1. Calculate total variable labor cost for the coming year. Round your answer to the nearest dollar. $

2. Calculate total fixed labor cost for the coming year. Round your answer to the nearest dollar. $

3. Calculate total labor cost for the coming year. Round your answer to the nearest dollar. $

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