Reference no: EM132522023

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                          360

February                 10,199                          550

March                     8,440                           630

April                       10,087                           610

May                           8,790                        480

June                          7,831                       350

July                         9,790                            570

August                         7,750                         310

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

Total Labor Cost = $7,080 + ($2.16 X Employee Hours)

Required:

Assume that 4,200 employee hours are budgeted for the coming year. Use the total labor cost formula to make the following calculations:

Question 1. Calculate total variable labor cost for the coming year. Round your answer to the nearest dollar.

Question 2. Calculate total fixed labor cost for the coming year. Round your answer to the nearest dollar.

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