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 eight months were collected:

Month	Labor Cost($)	Employee Hours
	January		7,556			310
	February		10,392			470
	March		11,055			500
	April		8,181			370
	May		9,507			430
	June		7,517			340
	July		9,932			530
	August		8,844			400

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 fixed cost of labor. $

2. Using the high-low method, calculate the variable rate. $per employee hour

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

Total labor cost = $+ ($ Employee hours)