Using High-Low to Calculate Fixed Cost, Calculate the Variable Rate, and Construct a Cost Function

Pizza Vesuvio makes specialty pizzas. Data for the past 8 months were collected:

Month		Labor Cost($)			Employee Hours
	January		9,790			550
	February		7,300			630
	March		7,831			670
	April		8,440			500
	May		10,087			590
	June		8,790			460
	July		13,716			760
	August		7,800			420

Pizza Vesuvio's controller wants to calculate the fixed and variable costs associated with labor used in the restaurant.

In your calculations, round the variable rate per employee hour to the nearest cent. If required, round your final answers to the nearest cent.

Required:

1. Using the high-low method, calculate the variable rate.

2. Using the high-low method, calculate the fixed cost of labor.

3. Using the high-low method, construct the cost formula for total labor cost.

Total labor cost