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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 $16,000 520,000 Wages and fringe benefits 4200 4.320 4,400 Fees paid delivery help 1.100 1.760 2200 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 Total $20.050 $27.040 $31.700 1.700 (a) Identify each cost as being variable, fixed, or mixed. Cost of food sold Variable Wages and fringe benefits Mixed Fees paid delivery help Fixed Rent on building Fixed Depreciation on equipment Fixed Utilities Mixed Supplies (soap, floor wax, etc.) Mixed Administrative costs Fixed 2 My Subscriptions Maggle Run Administrative costs Roxed (5) 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 Fleed Costs Variable costs Cost of food sold Wages and fringe benefits Fees and delivery help Sent on bude Depreciation on equipment 300 5.000 0.08 0.23 100 0 0 0.00 100 Predict total costs for a monthly sales volume of 9.800 units 531.735
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