Question

Assume a Papa John's restaurant has the following information available regarding costs at representative levels of monthly sales:

	Monthly sales in units
	5,000	8,000	10,000
Cost of food sold	$10,000	$16,000	$20,000
Wages and fringe benefits	5,150	5,240	5,300
Fees paid delivery help	1,150	1,840	2,300
Rent on building	1,400	1,400	1,400
Depreciation on equipment	800	800	800
Utilities	700	760	800
Supplies (soap, floor wax, etc.)	250	340	400
Administrative costs	1,200	1,200	1,200
Total	$20,650	$27,580	$32,200

A. Use the high-low method to develop a schedule identifying the amount of each cost that is fixed per month or variable per unit. Total the amounts under each category to develop an equation for total monthly costs.

Round variable cost answers to two decimal places.

	Fixed Costs	Variable Costs
Cost of food sold
Wages and fringe benefits
Fees paid delivery help
Rent on building
Depreciation on equipment
Utilities
Supplies (soap, floor wax, etc.)
Administrative costs
Total costs equation

B. Predict total costs for a monthly sales volume of 9,400 units. $______

Answer 1