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:

Month Labor Cost Employee Hours
January $7,000 360
February 8,140 550
March 9,899 630
April 9,787 590
May 8,490 480
June 7,450 350
July 9,490 570
August 7,531 310

Coefficients shown by a regression program for Pizza Vesuvio’s data are:

Intercept 4,481
X Variable 8.32


Use the results of regression to make the following calculations:

1. Calculate the fixed cost of labor.

Calculate the variable rate per employee hour.
$per employee hour

2. Construct the cost formula for total labor cost.
Total labor cost = $ + ($ × Employee hours)

3. Calculate the budgeted cost for next month, assuming that 670 employee hours are budgeted. Round answer to the nearest dollar.