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 out for one day. The hotel's business is highly seasonal, with peaks occurring during the ski season and in the summer.
Month | Occupancy- Days | Electrical Costs | |||||
January | 3,030 | $ | 9,044 | ||||
February | 3,080 | $ | 9,234 | ||||
March | 3,980 | $ | 11,913 | ||||
April | 1,630 | $ | 6,194 | ||||
May | 1,270 | $ | 4,826 | ||||
June | 2,110 | $ | 8,018 | ||||
July | 650 | $ | 2,470 | ||||
August | 3,690 | $ | 11,552 | ||||
September | 1,960 | $ | 7,448 | ||||
October | 4,410 | $ | 12,998 | ||||
November | 1,600 | $ | 6,080 | ||||
December | 2,230 | $ | 8,474 | ||||
|
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)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started