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In: Accounting

Assume a Potbelly's restaurant has the following information available regarding costs at representative levels of monthly...

Assume a Potbelly's restaurant has the following information available regarding costs at representative levels of monthly sales:

  Monthly sales in units
5,000 8,000 10,000
Cost of food sold $ 10,000 $ 16,000 $ 20,000
Wages and fringe benefits 4,200 4,320 4,400
Fees paid delivery help 1,100 1,760 2,200
Rent on building 1,100 1,100 1,100
Depreciation on equipment 900 900 900
Utilities 800 920 1,000
Supplies (soap, floor wax, etc.) 250 340 400
Administrative costs 1,700 1,700 1,700
Total $ 20,050 $ 27,040 $ 31,700


(a) Identify each cost as being variable, fixed, or mixed.

Cost of food sold

Variable

Fixed

Mixed

1.00 points out of 1.00



Wages and fringe benefits

Variable

Fixed

Mixed

1.00 points out of 1.00



Fees paid delivery help

Variable

Fixed

Mixed

1.00 points out of 1.00



Rent on building

Variable

Fixed

Mixed

1.00 points out of 1.00



Depreciation on equipment

Variable

Fixed

Mixed

1.00 points out of 1.00



Utilities

Variable

Fixed

Mixed

1.00 points out of 1.00



Supplies (soap, floor wax, etc.)

Variable

Fixed

Mixed

1.00 points out of 1.00



Administrative costs

Variable

Fixed

Mixed

1.00 points out of 1.00



(b) Use the high-low method to develop a schedule identifying the amount of each cost that is mixed or variable per unit. Total the amounts under each category to develop an equation for total monthly costs.

Round variable cost answers to two decimal places.

  Fixed Costs Variable Costs  
Cost of food sold Answer Answer X
Wages and fringe benefits Answer Answer X
Fees paid delivery help Answer Answer X
Rent on building Answer Answer X
Depreciation on equipment Answer Answer X
Utilities Answer Answer X
Supplies (soap, floor wax, etc.) Answer Answer X
Administrative costs Answer Answer X
 
Total costs equation Answer Answer X

* where X = Unit sales


(c) Predict total costs for a monthly sales volume of 9,800 units.
$Answer

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