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 | 3,240 | $ 8,622 |
February | 3,060 | $ 8,228 |
March | 1,150 | $ 3,910 |
April | 2,260 | $ 7,684 |
May | 4,310 | $ 10,984 |
June | 1,270 | $ 4,318 |
July | 3,410 | $ 9,418 |
August | 640 | $ 2,176 |
September | 1,310 | $ 4,454 |
October | 3,760 | $ 9,738 |
November | 1,330 | $ 4,522 |
December | 2,570 | $ 7,868 |
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