# High Low Method Costs for McDonalds

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

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.