High-Low Method of Predicting Cost The Lakeshore Hotel's guest-days of occupancy and custodial supplies expense over the last seven months were: X = level of activity Y = Total Cost Month Guest-Days of Occupancy Custodial Supplies Expense March 4,000 $ 7,500 Apri 6,500 $ 8,250 May 8,000 10,500 June 10,500 $12,000 July 12,000 $13,500 August 9,000 $10,750 September 7,500 $ 9,750 Using the high-low method, estimate a cost formula for custodial supplies expense. 1. Solve for the variable cost per unit (v). Select the high and low points of ACTIVITY. Always put the total cost in the numerator. 2. Using v from #1, solve for fixed costs (f). Using the data at either the high or low points of activity, plug in the value for v to solve for f, fixed costs. Y = v (x) + f 3. State the cost equation for custodial supplies with the values from #1 & #2. 4. Estimate the total custodial supplies expense at an occupancy level of 11,000 guest days