Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Question 1 Partially correct Mark 5.33 out of 8.00 Flag question Cost Behavior Analysis in a Restaurant: High-Low Cost Estimation Assume a Papa John's
Question 1 Partially correct Mark 5.33 out of 8.00 Flag 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 monthly sales: Cost of food sold Wages and fringe benefits Monthly sales in units 5,000 8,000 10,000 $10,000 $16,000 $20,000 4.200 4.320 4,400 1.200 1,920 2.400 Fees paid delivery help Rent on building 1,300 1,300 1,300 Depreciation on equipment Utilities 500 500 500 800 920 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 Wages and fringe benefits = Variable Mixed O Fees paid delivery help Variable Rent on building Fixed Depreciation on equipment Fixed Utilities Mixed Supplies (soap, floor wax, etc.) Fixed Administrative costs Fixed = = x (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 Cost of food sold $ Wages and fringe benefits 0 4,000 $ Variable Costs 2 X Fees paid delivery help 0 0.04 X 0.22 x X Rent on building 1,100 x 0 X Depreciation on equipment Utilities 900 x 0 X 600 0.04 X Supplies (soap, floor wax, etc.) 100 0.03 x X Administrative costs 1,700 x 0 X Total costs equation $ 8,400 x $ 2.33 x X (c) Predict total costs for a monthly sales volume of 9,100 units. $ 31,234 x
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