Exercise 6A-1 High-Low Method [LO6-10]

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	3,180		$	6,510
February	2,920		$	6,261
March	3,780		$	7,392
April	2,160		$	5,569
May	650		$	1,820
June	2,050		$	5,261
July	4,050		$	7,829
August	4,070		$	7,896
September	1,780		$	4,984
October	570		$	1,596
November	1,580		$	4,424
December	2,680		$	5,908

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.)