Using High-Low to Calculate Predicted Total Variable Cost and Total Cost for Budgeted Output

Pizza Vesuvio makes specialty pizzas. Data for the past 8 months were collected:

	Month	Labor Cost		Employee Hours
	January		$7,000		370
	February		$9,899		560
	March		$8,140		670
	April		$9,787		620
	May		$8,490		490
	June		$7,531		360
	July		$9,490		580
	August		$7,450		320

Assume that this information was used to construct the following formula for monthly labor cost.

Total Labor Cost = $6820 + ($1.97 x Employee Hours)

Required:

Assume that 705 employee hours are budgeted for the month of September. Use the total labor cost formula for the following calculations:

1. Calculate total variable labor cost for September. Round your answer to nearest whole number. $fill in the blank

2. Calculate total labor cost for September. Round your answer to nearest whole number. $fill in the blank