Question
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
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 hotel's business is highly seasonal, with peaks occurring during the ski season and in the summer.
MonthOccupancy-dayElectrical Costs
January3,1806,510
February2,9206,261
March3,7807,392
April2,1605,569
May6501,820
June2,0505,261
July4,0507,829
August4,0707,896
September1,7804,984
October5701,596
November1,5804,424
December2,6805,908
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.)
Variable cost of electricity?per occupancy-day
Fixed cost of electricity?per month
2. What other factors in addition to occupancy-days are likely to affect the variation in electrical costs from month to month?
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