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 | 2,630 | $ | 10,783 | ||
February | 3,130 | $ | 12,833 | ||
March | 3,640 | $ | 13,583 | ||
April | 1,090 | $ | 4,469 | ||
May | 1,770 | $ | 7,257 | ||
June | 1,730 | $ | 7,093 | ||
July | 4,440 | $ | 14,854 | ||
August | 3,860 | $ | 13,815 | ||
September | 2,170 | $ | 8,897 | ||
October | 1,210 | $ | 4,961 | ||
November | 1,790 | $ | 7,339 | ||
December | 2,930 | $ | 12,013 | ||
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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