Using Regression to Calculate Fixed Cost, Calculate the Variable Rate, Construct

Question

Using Regression to Calculate Fixed Cost, Calculate the Variable Rate, Construct a Cost Formula, and Determine Budgeted Cost Pizza Vesuvio makes specialty pizzas. Data for the past 8 months were collected: Month January February March April May June July August Labor Cost $7,000 8,140 9,899 9,787 8,490 7,450 9,490 7,531 Employee Hours 360 550 630 590 480 350 570 310 Coefficients shown by a regression program for Pizza Vesuvio's data are: Intercept 4,481 X Variable 8.32 In your calculations, round the variable rate per employee hour to the nearest cent. Required Use the results of regression to make the following calculations: 1. Calculate the fixed cost of labor. Calculate the variable rate per employee hour. per employee hour 2. Construct the cost formula for total labor cost. Total labor cost-$ 3. Calculate the budgeted cost for next month, assuming that 710 employee hours are budgeted. Round answer to the nearest dollar x Employee hours)

Explanation / Answer

1 Calculation of fixed cost of labour Fixed cost = 4481 Variable rate = 8.32 2 construct the cost formula for total labor cost total labor cost = $4481+(8.32 x employee hours) 3) calculate the budgeted cost for next month assuming that 710 employee hours budgeted budgeted labor cost = 4481+(8.32*710employees) budgeted labor cost = 4481+(8.32*710employees)                                             = 10388.2

Related Questions

Navigate

• Browse (All)
• Browse U
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.