Question
The Edelweiss Hotel in Vail, Colorado has accumulated records of the total electrical costs of the hotel and the number of occupancy-days over the last
The Edelweiss Hotel in Vail, Colorado 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 out 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 |
Jan | 2604 | $6,257.00 |
Feb | 2856 | $6,550.00 |
Mar | 3534 | $7,986.00 |
Apr | 1440 | $4,022.00 |
May | 540 | $2,289.00 |
Jun | 1116 | $3,591.00 |
Jul | 3162 | $7,264.00 |
Aug | 3608 | $8,111.00 |
Sep | 1260 | $3,707.00 |
Oct | 186 | $1,712.00 |
Nov | 1080 | $3,321.00 |
Dec | 2046 | $5,196.00 |
Required:
1) Using the high / lo method, estimate the fixed cost of electricity per month and the variable cost of electricty per occupancy-day. Round off the fixed cost to the nearest whole dollar and the variable cost to the nearest whole cent.
2) What other factors other than occupancy-days are likely to affect the variation in electrical costs from month to month?
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