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		$7,000			360
February		8,140			550
March		9,899			630
April		9,787			610
May		8,490			480
June		7,450			350
July		9,490			570
August		7,531			310

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.

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]

/T tot 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 February March April May June July August Pizza Vesuvio's controller wants to calculate the fixed and variable costs associated with labor used in th restaurant. $7,000 8,140 9,899 9,787 8,490 7,450 9,490 7,531 360 550 630 610 480 350 570 310 In your calculations, round the variable rate per employee hour 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- x Employee hours] Feedback Check My Work