Question

Using High-Low to Calculate and cont Calculate the Variable Roster, and Construct a cost functie Piazza Vesuvio makes speciaky puzzas. Data for the past 3 months were collected: Month Labor Cost($) Employee Hours Lanuary 9.490 February 7,000 March 7,531 April May 9,787 June 8.490 July 11,820 August 7,500 300 Pizza Vesuvio's controller wants to calculate the fixed and variable costs associated with labor used in the restaurant In your calculations, round the variable rate per employee hour to the nearest cent. If required, round your final answers to the nearest cent. Required: 1. Using the high-low method, calculate the fixed cost of labor. 2. Using the high-low method. calculate the variable rate. per employee hour 3. Using the high-low method. construct the cost formula for total labor cost. Tota labor cost = (5 Employee hours)

Answer 1

Question-1
	Labor cost	Employee hours
High level	11820	540
Low level	7500	300
Change	4320	240
1
Unit variable cost	18	=4320/240
Fixed cost of labor	2100	=11820-(540*18)
2
Variable rate	18	per employee hour
3
Total labor cost = $ 2100 + ($ 18 X Employee hours)
Question-2
1
Total variable cost	1432	=685*2.09
2
Total labor cost	8009	=1432+6577
Question-3
1
Total variable cost	8424	=3900*2.16
2
Total fixed cost	6637
3
Total labor cost	15061	=8424+6637