USING HIGH-LOW TO CALCULATE FIXED COST, .CULATE THE VARIABLE RATE, AND CONSTRUCT A COST FUNCTION (LO 3)

Pizza Vesuvio makes specialty pizzas. Vesuvio's controller wants to calculate the fixed and variable costs associated with labour used in the restaurant. Data for the past eight months were collected:

Month Labour Cost ($) Employee Hours

January 7,000 360

February 8,140 550

March 9,010 585

April 9,787 610

May 8,490 480

June 2,450 350

July 9,490 570

August 7,531 310

Required:

Using the high-low method, calculate the fixed cost of labor, calculate the variable rate per employee hour, and construct the cost formula for total labor cost.