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	3,410	$ 13,889
February	3,250	$ 13,008
March	4,470	$ 15,158
April	1,940	$ 8,342
May	1,050	$ 4,515
June	450	$ 1,935
July	3,270	$ 13,094
August	4,510	$ 15,333
September	1,350	$ 5,805
October	1,640	$ 7,052
November	1,860	$ 7,998
December	2,970	$ 12,578

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.)

2. What other factors in addition to occupancy-days are likely to affect the variation in electrical costs from month to month? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.)

check all that apply

• Systematic factors like guests, switching off fans and lights.
• Number of days present in a month.unanswered
• Income taxes paid on hotel income.unanswered
• Seasonal factors like winter or summer.unanswered
• Fixed salary paid to hotel receptio

Miller Companys contribution format income statement for the most recent month is shown below:

	Total	Per Unit
Sales (42,000 units)	$ 336,000	$ 8.00
Variable expenses	210,000	5.00
Contribution margin	126,000	$ 3.00
Fixed expenses	44,000
Net operating income	$ 82,000

Required:

(Consider each case independently):

1. What is the revised net operating income if unit sales increase by 16%?

2. What is the revised net operating income if the selling price decreases by $1.50 per unit and the number of units sold increases by 20%?

3. What is the revised net operating income if the selling price increases by $1.50 per unit, fixed expenses increase by $6,000, and the number of units sold decreases by 3%?

4. What is the revised net operating income if the selling price per unit increases by 20%, variable expenses increase by 20 cents per unit, and the number of units sold decreases by 5%?