Using High-Low to Calculate Predicted Total Variable Cost and Total Cost for Budgeted Output

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

	Month	Labor Cost		Employee Hours
	January		$6,800		420
	February		$9,699		610
	March		$7,940		710
	April		$9,587		670
	May		$8,290		540
	June		$7,331		410
	July		$9,290		630
	August		$7,250		370

Assume that this information was used to construct the following formula for monthly labor cost.

Total Labor Cost = $6499 + ($2.03 x Employee Hours)

Required:

Assume that 685 employee hours are budgeted for the month of September. Use the total labor cost formula for the following calculations:

Using High-Low to Calculate Predicted Total Variable Cost and Total Cost for Budgeted Output

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

	Month	Labor Cost		Employee Hours
	January		$6,800		420
	February		$9,699		610
	March		$7,940		710
	April		$9,587		670
	May		$8,290		540
	June		$7,331		410
	July		$9,290		630
	August		$7,250		370

Assume that this information was used to construct the following formula for monthly labor cost.

Total Labor Cost = $6499 + ($2.03 x Employee Hours)

Required:

Assume that 685 employee hours are budgeted for the month of September. Use the total labor cost formula for the following calculations:

1. Calculate total variable labor cost for September. Round your answer to nearest whole number. $fill in the blank 1

2. Calculate total labor cost for September. Round your answer to nearest whole number. $fill in the blank 2

Using High-Low to Calculate Predicted Total Variable Cost and Total Cost for a Time Period that Differs from the Data Period

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

	Month	Labor Cost			Employee Hours
	January		$6,800			350
	February		9,699			540
	March		7,940			640
	April		9,587			600
	May		8,290			470
	June		7,331			340
	July		9,290			560
	August		7,250			300

Assume that this information was used to construct the following formula for monthly labor cost.

Total Labor Cost = $6,641 + ($2.03 X Employee Hours)

Required:

Assume that 4,000 employee hours are budgeted for the coming year. Use the total labor cost formula to make the following calculations:

1. Calculate total variable labor cost for the coming year. Round your answer to the nearest dollar. $fill in the blank 1