Assume a Papa John's restaurant has the following information available regarding costs at representative levels of monthly sales:

	Monthly sales in units
	5,000	8,000	10,000
Cost of food sold	$10,000	$16,000	$20,000
Wages and fringe benefits	4,200	4,320	4,400
Fees paid delivery help	1,100	1,760	2,200
Rent on building	1,100	1,100	1,100
Depreciation on equipment	900	900	900
Utilities	800	920	1,000
Supplies (soap, floor wax, etc.)	250	340	400
Administrative costs	1,700	1,700	1,700
Total	$20,050	$27,040	$31,700

(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 fixed per month or variable per unit. Total the amounts under each category to develop an equation for total monthly costs.

Answer rating: 100% (QA)

Cost of food sold Variable costunit Total Change in CostsTotal change in units 1st 2 months 16000100... View the full answer