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 3,180 $ 6,510
February 2,920 $ 6,261
March 3,780 $ 7,392
April 2,160 $ 5,569
May 650 $ 1,820
June 2,050 $ 5,261
July 4,050 $ 7,829
August 4,070 $ 7,896
September 1,780 $ 4,984
October 570 $ 1,596
November 1,580 $ 4,424
December 2,680 $ 5,908
Required: 1. Using the high-low method, estimate the fixed cost of electricity per month and the variable cost of electricity per occupancy-day.
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Accounting Principles
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
13th edition
978-1-119-4110, 1119411483, 9781119411017, 978-1119411482
