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 hotels business is highly seasonal, with peaks occurring during the ski season and in the summer.
Month | Occupancy-Days | Electrical Costs | |||
January | 2,710 | $ | 5,270 | ||
February | 3,600 | $ | 6,205 | ||
March | 860 | $ | 2,150 | ||
April | 2,170 | $ | 4,350 | ||
May | 4,200 | $ | 7,160 | ||
June | 1,530 | $ | 3,825 | ||
July | 4,110 | $ | 7,050 | ||
August | 4,060 | $ | 6,925 | ||
September | 1,980 | $ | 4,090 | ||
October | 1,160 | $ | 2,900 | ||
November | 1,210 | $ | 3,025 | ||
December | 2,480 | $ | 4,910 | ||
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.)
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