Question: 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

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 $7,300 420
February 10,199 610
March 8,440 720
April 10,087 670
May 8,790 540
June 7,831 410
July 9,790 630
August 7,750 370

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

Total Labor Cost = $7,021 + ($1.97 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

2. Calculate total fixed labor cost for the coming year. Round your answer to the nearest dollar. $fill in the blank 2

3. Calculate total labor cost for the coming year. Round your answer to the nearest dollar.

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