Question
Assume a Potbellys restaurant has the following information available regarding costs at represent- tive levels of monthly sales: Monthly sales in units 5,000 8,000 10,000
Assume a Potbellys restaurant has the following information available regarding costs at represent- tive 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 ............................ 4,200 4,320 4,400 Fees paid delivery help............................... 1,100 1,760 2,200 Rent on building .................................... 1,100 1,100 1,100 Depreciation on equipment ........................... 900 900 900 Utilities ........................................... 800 920 1,000 Supplies (soap, floor wax, etc.) ........................ 250 340 400 Administrative costs................................. 1,700 1,700 1,700 Total ............................................. $20,050 $27,040 $31,700 Required a. Identify each cost as being variable, fixed, or mixed. b. Use the high-low method to develop a schedule identifying the amount of each cost that is mixed or variable per unit. Total the amounts under each category
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