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Exercise 1-5 High-Low Method [LO1-5 The Cheyenne Hotel in Big Sky, Montana, has accumulated records of the total electrical costs of the hotel and the
Exercise 1-5 High-Low Method [LO1-5 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 Occupancy- Days 3,560 3,420 4,120 1,990 430 1,750 3,690 3,970 1,950 1,450 2,050 2,300 Electrical Costs $6,573 $6,209 $7,022 $5,174 $1,118 $4,550 $6,687 $6,968 $5,070 $3,770 $5,330 $5,980 Month January February March April May June August September October November December 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 Costs High activity level Low activity level Change 0 Variable cost per occupancy-day Fixed cost element
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