Cost Behavior Analysis in a Restaurant: High-Low Cost Estimation Assume a Potbelly's restaurant has the following information available regarding costs at representative levels of monthly sales (meals served): Monthly sales in units 5,000 7,000 10,000 Cost of food sold $7,500 $10,500 $15,000 Wages and fringe benefits 5,900 5,940 6,000 Fees paid delivery help 6,000 8,400 12,000 Rent on building 3,500 3,500 3,500 Depreciation on equipment 850 850 850 Utilities 600 640 700 Supplies (soap, floor wax, etc.) 400 480 600 Administrative costs 1,200 1,200 1,200 Total $25,950 $31,510 $39,850 (a) Identify each cost as being variable, fixed, or mixed. Cost of food sold Variable Wages and fringe benefits Mixed Fees paid delivery help Variable Rent on building Fixed Depreciation on equipment Fixed Utilities Mixed Supplies (soap, floor wax, etc.) Mixed Administrative costs Fixed (a) Identify each cost as being variable, fixed, or mixed. Cost of food sold Variable Wages and fringe benefits Mixed Fees paid delivery help Variable Rent on building Fixed Depreciation on equipment Fixed Mixed Supplies (soap, floor wax, etc.) Mixed Administrative costs Fixed Utilities (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. Round variable cost answers to two decimal places. Fixed Costs Variable Costs X X 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 costs equation * where X = Unit sales X X X X (c) Predict total costs for a monthly sales volume of 8,500 units