Assume a Papa John's restaurant has the following information available regarding costs at representative levels of monthly
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Question:
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.
(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.
Related Book For
Project Management A Systems Approach to Planning Scheduling and Controlling
ISBN: 978-0470278703
10th Edition
Authors: Harold Kerzner
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