Question
The Alpine Hotel near Kosciuszko National Park in NSW, has accumulated records of the total electrical costs of the hotel and the number of occupancy-days
The Alpine Hotel near Kosciuszko National Park in NSW, 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 | 1,736 | $4,127 |
| |
February | 1,904 | $4,207 |
| |
March | 960 | $2,857 |
| |
April | 2,620 | $5,732 |
| |
May | 840 | $2,691 |
| |
June | 744 | $2,696 |
| |
July | 2,108 | $4,670 |
| |
August | 2,406 | $5,148 |
| |
September | 130 | $1,499 |
| |
October | 360 | $1,871 |
| |
November | 720 | $2,454 |
| |
December | 1,364 | $3,529 |
|
Required:
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 variable cost to the nearest cent and the fixed cost to the nearest dollar. (4 marks)
What other factor in addition to occupancy-days is likely to affect the variation in electrical costs from month to month? (1 marks)
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