Question
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
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?
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