Refer to Cliff’s Fresh Stacks Pancake Restaurant in E3-57B. 

Data in E3-57B.

Cliff’s Fresh Stacks Pancake Restaurant features sourdough pancakes made from a strain of sourdough dating back to Confederation. To plan for the future, Cliff needs to figure out his cost behaviour patterns. He has the following information about his operating costs and the number of pancakes served:

Requirements 

1. Use the high-low method to determine Cliff’s operating cost equation.

2. Use your answer from Requirement 1 to predict total monthly operating costs if Cliff serves 4,500 pancakes a month. 

3. Can you predict total monthly operating costs if Cliff serves 15,000 pancakes a month? Explain.

Transcribed Image Text:

Month July August Number of Pancakes 3,900 4,200 Total Operating Costs $2,340 $2,530