Solution
On the basis of the information provided, for determining the
required results using High-Low method of cost estimation, we
require the following details,
Highest Activity Hour
(HAH) : It means the highest employee hour taken. From the
given employee hour column, we can see that 670 is the highest.
Therefore, HAH = 670.
Total Cost of High
Activity (TCHA) : It means the relative cost of the highest
hour taken. From the cost column, cost related to 670 Hours is
$12,560. Therefore, TCHA = 12,560.
Lowest Activity Hour
(LAH) : It means the least employee hour taken. From the
employee hour column, 370 is the lowest value. Therefore,
LAH = 370.
Total Cost of Low Activity
(TCLA) : Relative cost to 370 hours is $7,400. Therefore,
TCLA = 7,400.
Now, let us find the variable cost per hour using the given formula,
Variable cost = (TCHA - TCLA) / (HAH - LAH)
Or, Variable Cost = (12560 - 7400) / (670 - 370)
Or, Variable Cost = 5170 / 300
Or, Variable Cost = 17.23 (Approx.)
Therefore, Variable Cost per hour = $17.23
Now, let us find the Fixed Costs using the given formula,
Total Cost = (Variable Cost x Employee Hours) + Fixed Costs
Now, taking any of the highest or lowest, we can determine the
Fixed Costs. For our calculation, we will take the highest
value.
Here,
12560 = (17.23 x 670) + Fixed Costs
Or, 12560 = 11544.10 + Fixed Costs
Or, Fixed Costs = 12560 - 11544.10
Or, Fixed Costs = 1015.90
Therefore, the fixed costs will be $1,015.90
Therefore, the cost equation will be,
Total Cost = Fixed Cost + (Variable Cost per hour x Employee
Hours)
Or,
Total Cost = 1015.90 + (17.23 x Employee Hours)
Answer:
1. Fixed Cost of labor = $1,015.90
2. Variable Rate = $17.23 per Employee Hour
3. Cost Formula:
Total Cost = $1,015.90 + ($17.23 x Employee Hours)
Pizza Vesuvio makes specialty pizzas. Data for the past 8 months were collected: Month Labor Cost($)...
Using High-Low to Calculate Fixed Cost, Calculate the Variable Rate, and Construct a Cost Function Pizza Vesuvio makes specialty pizzas. Data for the past 8 months were collected: Month Labor Cost($) Employee Hours 9,390 January 400 February 6,900 470 March 7,431 500 8,040 April 370 May 9,687 430 June 8,390 340 July 11,850 560 August 7,400 310 Pizza Vesuvio's controller wants to calculate the fixed and variable costs associated with labor used in the restaurant. In your calculations, round the...
Using High-Low to Calculate and cont Calculate the Variable Roster, and Construct a cost functie Piazza Vesuvio makes speciaky puzzas. Data for the past 3 months were collected: Month Labor Cost($) 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...
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 $6,900 380 February 9,799 March 8,040 April 9,687 May 8,390 June July 7,431 9,390 7,350 590 August 330 Assume that this information was used to construct the following formula for monthly to cost Total Labor Cost - $6,637 +(12.16 X...
#1 #2 #3 Please show work Using High-Low to Calculate Fixed Cost, Calculate the Variable Rate, and Construct a Cost Function Pizza Vesuvio makes specialty pizzas. Data for the past 8 months were collected: Month Labor Cost($) Employee Hours January 290 9,490 7,000 February 330 March 7,531 April 8,140 May 9,787 310 240 June 8,490 July 10,776 400 August 7,500 220 Pizza Vesuvio's controller wants to calculate the fixed and variable costs associated with labor used in the restaurant. In...
Using High-Low to Calculate Fixed Cost, Calculate the Variable Rate, and Construct a Cost Function Pizza Vesuvio makes specialty pizzas. Data for the past 8 months were collected: Month Labor Cost($) Employee Hours January 9,590 550 February 7,100 630 March 7,631 670 April 8,240 500 May 9,887 590 June 8,590 460 July 13,380 760 August 7,600 420 Pizza Vesuvio's controller wants to calculate the fixed and variable costs associated with labor used in the restaurant. In your calculations, round the...
Using High-Low to Calculate Fixed Cost, Calculate the Variable Rate, and Construct a Cost Function Pizza Vesuvio makes specialty pizzas. Data for the past 8 months were collected: Month Labor Cost($) Employee Hours January 9,290 310 February 6,800 360 March 7,331 380 April 7,940 290 May 9,587 340 June 8,290 260 July 10,378 ...
Using High-Low to Calculate Fixed Cost Calculate the Variable Rate, and Construct a Cost Function Pizza Vesuvio makes specialty pizzas. Data for the past 8 months were collected: Month Labor Cost($) Employee Hours January 9,490 510 February 7,000 590 March 7,531 620 April 8,140 470 May 9,787 550 June 8,490 430 July 12,708 700 August 7,500 390 Pizza Vesuvio's controller wants to calculate the fixed and variable costs associated with labor used in the restaurant. In your calculations, round the...
Using High-Low to Calculate Fixed Cost, Calculate the Variable Rate, and Construct a Cost Function Pizza Vesuvio makes specialty pizzas. Data for the past 8 months were collected: Month Labor Cost($) Employee Hours January 9,490 380 February 7,000 440 March 7,531 460 April 8,140 350 May 9,787 410 June 8,490 320 July 11,042 ...
Using High-Low to Calculate Fixed Cost, Calculate the Variable Rate, and Construct a Cost Function Pizza Vesuvio makes specialty pizzas. Data for the past 8 months were collected: Month January February March Labor Cost($) Employee Hours 9,490 7,000 7,531 8,140 9,787 8,490 April May June July 13,416 7,500 August Pizza Vesuvio's controller wants to calculate the fixed and variable costs associated with labor used in the restaurant In your calculations, round the variable rate per employee hour to the nearest...
Using High-Low to Calculate Fixed Cost, Calculate the Variable Rate, and Construct a Cost Function Pizza Vesuvio makes specialty pizzas. Data for the past 8 months were collected: Month Labor Cost($) Employee Hours January 9,290 510 February 6,800 590 March 7,331 620 April 7,940 470 May 9,587 550 June 8,290 430 July 12,508 700 August 7,300 390 Pizza Vesuvio's controller wants to calculate the fixed and variable costs associated with labor used in the restaurant. In your calculations, round the...