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 hotel's business is highly seasonal, with peaks occurring during the ski season and in the summer.

Month, Occupancy-Days, Electrical Costs

January 2,710 $5,270

February 3,600 $6,205

March 860 $2,150

April 2,170 $4,350

May 4,200 $7,160

June 1,530 $3,825

July 4,110 $7,050

August 4,060 $6,925

September 1,980 $4,090

October 1,160 $2,900

November 1,210 $3,025

December 2,480 $4,910

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.)

2. What other factors in addition to occupancy-days are likely to affect the variation in electrical costs from month to month?

• Systematic factors like guests, switching off fans and lights.
• Number of days present in a month
• Income taxes paid on hotel income.
• Seasonal factors like winter or summer.
• Fixed salary paid to hotel receptionist.