Question

1. Using Regression to Calculate Fixed Cost, Calculate the Variable Rate, Construct a Cost Formula, and Determine Budgeted Cost

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

   Month	Labor Cost			Employee Hours
   January	$7,100			360
   February	8,140			550
   March	9,899			630
   April	9,787			600
   May	8,490			480
   June	7,450			350
   July	9,490			570
   August	7,531			310

   Coefficients shown by a regression program for Pizza Vesuvio's data are:

   Intercept	4,562
   X Variable	8.15

   In your calculations, round the variable rate per employee hour to the nearest cent.

   Required:

   Use the results of regression to make the following calculations:

   1. Calculate the fixed cost of labor.
   $

   Calculate the variable rate per employee hour.
   $per employee hour

   2. Construct the cost formula for total labor cost.
   Total labor cost = $ + ($ × Employee hours)

   3. Calculate the budgeted cost for next month, assuming that 655 employee hours are budgeted. Round answer to the nearest dollar.
   $

Please show work

Answer 1

Fixed cost of labor = Intercept
Variable rate per employee hour = X Variable
1
Fixed cost of labor	4562
Variable rate	8.15	per employee hour
2
Total labor cost = $4562 + ($8.15 × Employee hours)
3
Budgeted cost	9900	=4562+(655*8.15)