Jim Jones, the owner of Jim’s Place, wants to analyze labor costs in his restaur
ID: 2556853 • Letter: J
Question
Jim Jones, the owner of Jim’s Place, wants to analyze labor costs in his restaurant operations and has asked you for assistance. The operating statistics for the previous year are as follows:
# of Customers
Labor Cost
January
4,000
$15,500
February
2,400
10,450
March
3,700
18,500
April
4,450
19,000
May
4,400
19,000
June
4,800
20,250
July
5,000
20,500
August
3,900
18,500
September
3,800
18,000
October
3,100
15,500
November
2,900
15,250
December
3,000
16,650
Using the high/low two-point method, determine the variable labor cost per customer.
What is the monthly fixed labor cost at Jim’s Place?
What is your estimate of total labor costs if 3,900 customers are served during the month? (Base this on your analysis in parts 1 and 2 above).
# of Customers
Labor Cost
January
4,000
$15,500
February
2,400
10,450
March
3,700
18,500
April
4,450
19,000
May
4,400
19,000
June
4,800
20,250
July
5,000
20,500
August
3,900
18,500
September
3,800
18,000
October
3,100
15,500
November
2,900
15,250
December
3,000
16,650
Explanation / Answer
Dear Student Thank you for using Chegg Please find below the answer Statementshowing Computations Paticulars Amount Cost at highest level of activity 20,500.00 Cost at Lowest level of activity 10,450.00 Highest level of activity 5,000.00 Lowest Level of activity 2,400.00 Variable cost per unit = (20500 - 10450)/(5000 - 2400) Variable cost per unit = 10,050/2600 Variable cost per unit = $3.8654 Fixed Costs = 20500 - 5000*3.8654 Fixed Costs = 20500 - 19,326.92 Fixed Costs = 1,173.08 Total Labor costs = 3900*3.8654 + 1173.08 16,248.14
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