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		$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

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

Total Labor Cost = $5,237 + ($7.40 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.
$

2. Calculate total fixed labor cost for the coming year.
$

3. Calculate total labor cost for the coming year.

Answer rating: 100% (QA)

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