Explore BrainMass

Explore BrainMass

    High Low Method Costs for McDonalds

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    1) Below is the following data on McDonald's restaurants and related labor costs. Perform an analysis using the high low method and develop a cost equation.

    Mc Donald' s Store Labor Costs Sales $'s
    1 423,529 $1,323,527
    2 537,218 $1,790,729
    3 336,000 $ 840,000
    4 427,275 $1,424,250

    2) Assume the following based on the cost equation you developed for the above information. What is the predicted labor cost for the following sales volumes -

    Sales Labor Costs
    1,200,000
    950,000
    1,100,000

    © BrainMass Inc. brainmass.com June 3, 2020, 8:20 pm ad1c9bdddf
    https://brainmass.com/business/accounting/high-low-method-costs-mcdonalds-133215

    Solution Preview

    1.
    In the high low method, we take the highest and the lowest value to get the variable and the fixed cost
    High is - Cost 537,218 and Sales 1,790,729
    Low is - Cost 336,000 and Sales 840,000
    We then ...

    Solution Summary

    The solution explains the use of high low method to develop the cost function.

    $2.19

    ADVERTISEMENT