EXERCISE 25 High-Low Method [L05] 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 360 January 1,736 $4,127 February 1,904 $4,207 March 2,356 $5,083 April 960 $2,857 May $1,871 June 744 $2,696 July 2,108 $4,670 August 2,406 $5,148 September 840 $2,691 October 124 $1,588 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 off the fixed cost to the nearest whole dollar and the variable cost to the nearest whole cent. 2. Using the high-low method, estimate the electrical costs if the occupancy-days are 3000 for a specific month. 3. Using the least-square (Regression) method, estimate the cost function (formula). 4. Using the least-square (Regression) method, estimate the electrical costs if the occupancy- days are 3000 for a specific month. 5. What other factors other than occupancy-days are likely to affect the variation in electrical costs from month to month