Question
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 | 1,100 | 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 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.
Round variable cost answers to two decimal places.
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 Correct 1.00 points out of 1.00 |
Depreciation on equipment | Answer
| Answer Correct 1.00 points out of 1.00 |
Utilities | Answer
| Answer
|
Supplies (soap, floor wax, etc.) | Answer
| Answer
|
Administrative costs | Answer Incorrect 0.00 points out of 1.00 | Answer
|
Total costs equation | Answer
| Answer
|
need help with part b
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