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 | 2,612 | $5,576 |
April | 960 | $2,857 |
May | 127 | $1,476 |
June | 744 | $2,696 |
July | 2,108 | $4,670 |
August | 2,406 | $5,148 |
September | 840 | $2,691 |
October | 360 | $1,871 |
November | 720 | $2,454 |
December | 1,364 | $3,529 |
Required:
- Using the high-low method, estimate the variable cost of electricity per occupancy-day and the fixed cost of electricity per month. Round off the variable cost to the nearest whole cent and the fixed cost to the nearest whole 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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