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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 3,400 $ 9,536
February 4,150 $ 10,180
March 3,080 $ 9,184
April 2,230 $ 7,136
May 1,570 $ 5,024
June 1,910 $ 6,112
July 3,880 $ 9,997
August 3,830 $ 9,904
September 2,060 $ 6,592
October 1,940 $ 6,208
November 1,050 $ 3,360
December 2,710 $ 8,168

Required:

1. Using the high-low method, estimate the fixed cost of electricity per month and the variable cost of electricity per occupancy-day.

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)

systematic factors like guests, switching off fan and lights

number of days present in a month

income taxes paid on hotel income

seasonal factors like winter and summer

fixed salary paid to hotel receptionist

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