BRIEF EXERCISE 6-2 Applying the High-Low Method [LO2-CC9] The Royal Canadian Lodge in Banff, Alberta, has accumulated records of the total electrical costs of the hotel and the number of occupancy-days over the last year. An occupancy-day represents a room rented out for one day. The hotel's business is highly seasonal, with peaks occurring during the ski season and in the summer. Month Occupancy-Days Electrical Costs January February 1,736 $4,127 1,407 3,207 March 2,555 5,210 April 960 2,857 May 630 2,871 June 744 2,696 July 2,108 4,670 August 1,406 3,148 September 480 1,391 October 230 1,490 November 720 2,454 December 1,364 3,529 Required: 1. Using the high-low method, estimate the fixed cost of electricity per month and the variable cost of electricity per occupancy-day. Round the fixed cost to the nearest whole dollar and the variable cost to the nearest whole cent. 2. What factors other than occupancy-days are likely to affect the monthly variation in electrical costs? BRIEF EXERCISE 6-5 Understanding Cost Behaviour and Contribution Margin [LO1 - CC1, 3; LO3 - CC12] Murugan Ltd. had the following results for the year: Sales Less: Operating expenses Net operating income $45,000 39,000 $6,000