Espresso Express operates a number of espresso coffee stands in busy suburban malls. The fixed weekly expense of a coffee stand is $1,400 and the variable cost per cup of coffee served is $0.18.

Required:
1.	Fill in the following table with your estimates of total costs and cost per cup of coffee at the indicated levels of activity for a coffee stand. (Round the Average cost per cup of coffee served to 3 decimal places.)

Cups of coffee served in the week

1400 1500 1600

Fixed cost

Variable cost

Total cost

Average cost per cup

Of coffee served

2.

Does the average cost per cup of coffee served increase, decrease, or remain the same as the number of cups of coffee served in a week increases?

	Increase
	Decrease
	Remain the same

The Cheyenne Hotel in Big Sky, Montana, 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	3,400	$	10,234
February	3,280	$	10,052
March	4,370	$	11,605
April	1,950	$	6,825
May	680	$	2,380
June	1,960	$	6,860
July	4,040	$	11,060
August	4,080	$	11,100
September	2,240	$	7,602
October	1,030	$	3,605
November	1,460	$	4,634
December	2,700	$	8,974

Required:
1.	Using the high-low method, estimate the fixed cost of electricity per month and the variable cost of electricity per occupancy-day. (Do not round your intermediate calculations. Round your Variable cost answer to 2 decimal places and Fixed cost element answer to nearest whole dollar amount)
	Occupancy days Electrical cost High activity level Low activity level Change Variable cost Fixed cost element

2.

What other factors other than occupancy-days are likely to affect the variation in electrical costs from month to month? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answers and double click the box with the question mark to empty the box for a wrong answers.)

	Systematic factors like guests, switching off fans and lights.
	Number of days present in a month.
	Income taxes paid on hotel income.
	Seasonal factors like winter or summer.