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	1,200	1,920	2,400
Rent on building	1,300	1,300	1,300
Depreciation on equipment	500	500	500
Utilities	800	920	1,000
Supplies (soap, floor wax, etc.)	200	260	300
Administrative costs	1,600	1,600	1,600
Total	$19,800	$26,820	$31,500

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

Wages and fringe benefits

AnswerVariableFixedMixed

Fees paid delivery help

AnswerVariableFixedMixed

Rent on building

AnswerVariableFixedMixed

Depreciation on equipment

AnswerVariableFixedMixed

Utilities

AnswerVariableFixedMixed

Supplies (soap, floor wax, etc.)

AnswerVariableFixedMixed

Administrative costs

AnswerVariableFixedMixed

(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.

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 9,100 units. $Answer