Answered step by step
Verified Expert Solution
Question
1 Approved Answer
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
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) 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.
Round variable cost answers to two decimal places.
Fixed Costs | Variable Costs | ||
---|---|---|---|
Cost of food sold | Answer | Answer | X |
Wages and fringe benefits | Answer | Answer | X |
Fees paid delivery help | Answer | Answer | X |
Rent on building | Answer | Answer | X |
Depreciation on equipment | Answer | Answer | X |
Utilities | Answer | Answer | X |
Supplies (soap, floor wax, etc.) | Answer | Answer | X |
Administrative costs | Answer | Answer | X |
Total costs equation | Answer | Answer | X |
(B) Predict total costs for a monthly sales volume of 9,100 units.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started