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Using High-Low to Calculate Fixed Cost, Calculate the Variable Rate, and Construct a Cost Function Pizza Vesuvio makes specialty pizzas. Data for the past eight

Using High-Low to Calculate Fixed Cost, Calculate the Variable Rate, and Construct a Cost Function

Pizza Vesuvio makes specialty pizzas. Data for the past eight months were collected:

Month Labor Cost($) Employee Hours
January 7,556 310
February 10,392 470
March 11,055 500
April 8,181 370
May 9,507 430
June 7,517 340
July 9,932 530
August 8,844 400

Pizza Vesuvio's controller wants to calculate the fixed and variable costs associated with labor used in the restaurant.

In your calculations, round the variable rate per employee hour to the nearest cent. If required, round your final answers to the nearest cent.

Required:

1. Using the high-low method, calculate the fixed cost of labor. $

2. Using the high-low method, calculate the variable rate. $per employee hour

3. Using the high-low method, construct the cost formula for total labor cost.

Total labor cost = $+ ($ Employee hours)

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