Question: 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

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 as follows:

MonthLabor CostEmployee Hours
January$6,800420
February$9,699610
March$7,940710
April$9,587670
May$8,290540
June$7,331410
July$9,290630
August$7,250370

From this data, the following cost formula for monthly labor cost was estimated:

Total Labor Cost=6,499+(2.03×Employee Hours)text{Total Labor Cost} = 6,499 + (2.03 times text{Employee Hours})Total Labor Cost=6,499+(2.03×Employee Hours)

Required:

Assume that 665 employee hours are budgeted for the month of September. Use the above cost formula to answer the following:

  1. Calculate the total variable labor cost for September. (Round your answer to the nearest whole number.)
    Answer: $ __________

  2. Calculate the total labor cost for September. (Round your answer to the nearest whole number.)
    Answer: $ __________

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock

To solve this problem we will use the provided formula for total labor cost which includes both a fi... View full answer

blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!