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Using High-Low to Calculate Predicted Total Variable Cost and Total Cost for Budgeted Output Pizza Vesuvio...

Using High-Low to Calculate Predicted Total Variable Cost and Total Cost for Budgeted Output

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

Month Labor Cost Employee Hours
January $7,000   360
February 8,140 550
March 9,899 630
April 9,787 610
May 8,490 480
June 7,450 350
July 9,490 570
August 7,531 310

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

Total Labor Cost = $5,237 + ($7.40 x Employee Hours)

Required:

Assume that 675 employee hours are budgeted for the month of September. Use the total labor cost formula for the following calculations:

1. Calculate total variable labor cost for September.
$

2. Calculate total labor cost for September.
$

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