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Pizza Vesuvio makes specialty pizzas
Pizza Vesuvio makes specialty pizzas. Vesuvio's controller wants to calculate the fixed and variable costs associated with labour used in the restaurant. Data for the past eight months were collected:
Month Labour Cost ($) Employee Hours
January 7,000 360
February 8,140 550
March 9,010 585
April 9,787 610
May 8,490 480
June 2,450 350
July 9,490 570
August 7,531 310
Required:
Using the high-low method, calculate the fixed cost of labour, calculate the variable rate per employee hour, and construct the cost formula for total labour cost.
Expert Solution
PFA
3.)
Cost formula is as follows;
Budgeted cost= Fixed cost- (Variable cost x Employees hour)
Substitute the values;
Budgeted cost= 5199.80+ (7.52 X Employees hour)
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