Cost Behavior Analysis in a Restaurant: High-Low Cost Estimation 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	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

(a) Identify each cost as being variable, fixed, or mixed. Cost of food sold Answer

Wages and fringe benefits Answer Fees paid delivery help Answer Rent on building Answer Depreciation on equipment Answer Utilities Answer Supplies (soap, floor wax, etc.) Answer Administrative costs Answer

(b) 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.

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

(c) Predict total costs for a monthly sales volume of 9,800 units. $Answer