1. High/Low method

Mr. Hernandez, the manager of the Texas Inn, has asked you to estimate the hotels repair and maintenance expense for 2010 based on 2009 results. The hotel has 500 total rooms. The information he has given you from selected 2009 monthly financial statements is as follows:

Total Repair & Average Number

Month Maintenance Expense of Rooms Occupied

January $12,800 350

April 13,800 420

July 13,000 340

October 14,000 470

December 14,000 465

A. What was the variable portion of repair and maintenance expense per room per month for 2009?

B. Using the high/low two-point method, estimate the monthly fixed repair and maintenance expense for 2009:

C. If Mr. Hernandez projects the hotels occupancy to average 500 rooms/month during 2010, what is the hotels estimated ANNUAL repair and maintenance expense for 2010?