PB.9 This problem is in the textbook. Consider the following sales and wage cost

Question

PB.9 This problem is in the textbook. Consider the following sales and wage cost information for a restaurant. identify the high and low months

Conduct a High-Low analysis of the data to determine Variable Cost % and Fixed Costs in the High and Low months

Fixed Cost

Finally, using the calculated Variable Cost %, give the breakdown of Total Annual Wages into Fixed and Variable components

Revenue Wages High or Low? January 11,200 5,300 February 13,000 6,100 March 14,900 6,200 April 19,100 7,000 May 22,000 9,000 June 24,200 9,600 July 26,300 9,700 August 27,400 10,100 September 23,500 8,300 October 20,100 7,600 November 18,200 8,000 December 16,000 7,100 Total $235,900 $94,000

Explanation / Answer

Month Revenue Wages High or Low? January 11200 5300 Low August 27400 10100 High Revenue Wages Maximum $ 27400 10100 Minimum $ 11200 5300 Difference $ 16200 4800 Variable Cost Percentage 29.63% (4800/16200) Maximum Labor Cost $ 10100 Variable Cost for High Data ($27400 x 29.63%) 8119 Fixed Cost ($10100 - $8119) 1981 Minimum Labor Cost $ 5300 Variable Cost for Low Data ($11200 x 29.63%) 3319 Fixed Cost ($5300 - $3319) 1981 Percentage Total Dollars Total Annual Wages $ 100% 94000 Variable Cost $ 29.63% 69897 Total Fixed Costs $ 24103

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