FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Using High-Low to Calculate Fixed Cost, Calculate the Variable Rate, and
Construct a Cost Function
Refer to the information for Pizza Vesuvio on the previous page. Pizza
Vesuvio's controller wants to calculate the fixed and variable costs
associated with labor used in the restaurant.
Required:
Using the high-low method, calculate the fixed cost of labor, calculate
the variable rate per employee hour, and construct the cost formula for
total labor cost.
Use the following information for Brief Exercises 3-17 through 3-20:

Pizza Vesuvio makes specialty pizzas. Data for the past 8 months were
collected:
Month
Labor Cost
Employee Hours
January
February
March
$7,000
360
8,140
550
9,899
630
April
May
June
July
August
9,787
610
8,490
480
7,450
350
9,490
570
7,531
310
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Transcribed Image Text:Pizza Vesuvio makes specialty pizzas. Data for the past 8 months were collected: Month Labor Cost Employee Hours January February March $7,000 360 8,140 550 9,899 630 April May June July August 9,787 610 8,490 480 7,450 350 9,490 570 7,531 310
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