Cornerstones of Managerial Accounting 6th Edition by Maryanne Mowen,Don Hansen ,Dan Heitger

Exercise 40

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 eight months were collected:

Refer to the information for Pizza Vesuvio on the previous page. Coefficients shown by a regression program for Pizza Vesuvio's data are:

Required:
Use the results of regression to make the following calculations:
1. Calculate the fixed cost of labor and the variable rate per employee hour.
2. Construct the cost formula for total labor cost.
3. Calculate the budgeted cost for next month, assuming that 675 employee hours are budgeted. ( Note: Round answers to the nearest dollar.)