The following information is available for your Lucro Island Hotel.

	September	October	November	December
Sales (average No. of rooms per day)	25	26	28	27
Total cost per month	$120,000	$119,240	$123,600	$123,480

REQUIRED:

a) Using the high-low method, estimate the cost formula for Lucro Island Hotel. (3 marks)

b) Using the cost formula determined in part (a) above, estimate total expenses for January based a projected sales of an average 27 rooms per day for the month of January. Show your workings. (2 marks)

Submit your answer in text form below.