Exercise 5A-1 (Algo) High-Low Method [LO5-10]

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 for one day. The hotels business is highly seasonal, with peaks occurring during the ski season and in the summer.

Month	Occupancy-Days		Electrical Costs
January	2,620		$	5,100
February	580		$	1,450
March	4,080		$	6,575
April	2,000		$	5,000
May	2,880		$	5,750
June	1,750		$	4,375
July	3,430		$	5,965
August	940		$	2,350
September	1,570		$	3,925
October	4,320		$	7,060
November	1,210		$	3,025
December	2,740		$	5,400

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.)