Coefficients shown by a regression program for Pizza Vesuvio's data are: Intercept 4,517 X Variable 8.20 In your calculations, round the variable rate per employee hour to the nearest cent. Required: Use the results of regression to make the following calculations: 1. Calculate the fixed cost of labor. $_________ Calculate the variable rate per employee hour. $__________per employee hour 2. Construct the cost formula for total labor cost. Total labor cost = $________+ ($_____ × Employee hours) 3. Calculate the budgeted cost for next month, assuming that 675 employee hours are budgeted.
Using Regression to Calculate Fixed Cost, Calculate the Variable Rate, Construct a Cost Formula, and Determine Budgeted Cost
Pizza Vesuvio makes specialty pizzas. Data for the past 8 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 |
Coefficients shown by a regression program for Pizza Vesuvio's data are:
| Intercept | 4,517 |
| X Variable | 8.20 |
In your calculations, round the variable rate per employee hour to the nearest cent.
Required:
Use the results of regression to make the following calculations:
1. Calculate the fixed cost of labor.
$_________
Calculate the variable rate per employee hour.
$__________per employee hour
2. Construct the cost formula for total labor cost.
Total labor cost = $________+ ($_____ × Employee hours)
3. Calculate the budgeted cost for next month, assuming that 675 employee hours are budgeted.
$___________
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