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