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High and Low Method Jim, the owner of Jim’s Bistro, wants to analyze labor costs in...

High and Low Method

Jim, the owner of Jim’s Bistro, wants to analyze labor costs in his restaurant operations and has asked your assistance. Using the H-L method answer the following questions.

Month

Number of Customers

Labor Costs

Jan

4,000

$15,500

Feb

2,400

10,450

March

3,700

18,500

April

4,450

19,000

May

4,400

19,000

June

4,800

20,250

July

5,000

20,500

Aug

3,900

18,500

Sept

3,800

18,000

Oct

3,100

15,500

Nov

2,900

15,250

Dec

3,000

16,650

Total

Using the high/low two-point method, determine the variable labor cost per customer.

What is the monthly fixed labor cost at Jim’s Place?

What is your estimate of total labor costs if 3,900 customers are served during the month? (Base this on your analysis in parts 1 and 2 above)

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