Cost Behavior Analysis in a Restaurant: High-Low Cost Estimation Assume a Potbellys restaurant has the following information available regarding costs at representative levels of monthly sales (meals served): Monthly sales in units 5,000 7,000 10,000 Cost of food sold $ 7,500 $10,500 $15,000 Wages and fringe benefits 5,900 5,940 6,000 Fees paid delivery help 6,000 8,400 12,000 Rent on building 3,500 3,500 3,500 Depreciation on equipment 850 850 850 Utilities 600 640 700 Supplies (soap, floor wax, etc.) 400 480 600 Administrative costs 1,200 1,200 1,200 Total $25,950 $31,510 $39,850 (a) Identify each cost as being variable, fixed, or mixed. Cost of food sold Answer Variable Wages and fringe benefits Answer Mixed Fees paid delivery help Answer Variable Rent on building Answer Fixed Depreciation on equipment Answer Fixed Utilities Answer Mixed Supplies (soap, floor wax, etc.) Answer Mixed Administrative costs Answer Fixed (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 to develop an equation for total monthly costs. Round variable cost answers to two decimal places. Fixed Costs Variable Costs Cost of food sold Answer 0 Answer 0 X Wages and fringe benefits Answer 0 Answer 0 X Fees paid delivery help Answer 0 Answer 0 X Rent on building Answer 0 Answer 0 X Depreciation on equipment Answer 0 Answer 0 X Utilities Answer 0 Answer 0 X Supplies (soap, floor wax, etc.) Answer 0 Answer 0 X Administrative costs Answer 0 Answer 0 X Total costs equation Answer 0 Answer 0 X * where X = Unit sales