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:
|
|
Number of customers |
Labor costs |
| January |
|
4000 |
$15,500 |
| February |
|
2400 |
10450 |
| March |
|
3700 |
18500 |
| April |
|
4450 |
19000 |
| May |
|
4400 |
19000 |
| June |
|
4800 |
20250 |
| July |
|
5000 |
20500 |
| August |
|
3900 |
18500 |
| September |
|
3800 |
18000 |
| October |
|
3100 |
15500 |
| November |
|
2900 |
15250 |
| December |
|
3000 |
16650 |
1. Using the high/ low two-point method, determine the variable cost per customer.
2. What is the monthly fixed labor cost at Jim's Place?
3. What is your estimate of total labor costs if 3900 customers are served during the month?
(Base this on your analysis in parts 1 and 2 above.)