In the past, Big Piney Resort has had great difficulty in predicting its costs at various levels of activity through the year. The reason is that the company has never attempted to study its cost structure by analysing cost behaviour patterns. The president has now become convinced that such an analysis is necessary if the company is to maintain its profits and its competitive position. Accordingly, an analysis of cost behaviour patterns has been undertaken.

The company has managed to identify variable and fixed costs in all areas of its operation except for food services. Costs in this area do not seem to exhibit either a strictly variable or a strictly fixed pattern. Food costs over the past several months, along with the number of meals served, are given below:

Number of meals served Total food cost January 4,000 E 17,000 February 5,000 21,000 March 6,000 24,000 April 10,000 33,000 May 11,500 35,000 June 1 1,000 33,000 July 9,000 30,000 August 8,000 27,500 September 7,000 26,000