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The Lakeshore Hotel's guest-days of occupancy and custodial supplies expense over the last seven months were: Month Guest-Days of Custodial Supplies Occupancy Expense March 2,800
The Lakeshore Hotel's guest-days of occupancy and custodial supplies expense over the last seven months were: Month Guest-Days of Custodial Supplies Occupancy Expense March 2,800 $17,400 April 4,490 $22,500 May 5,040 $23,000 June 4,260 $19,900 July 7,070 $31,918 August 7,000 $27,600 Sept 3,000 $18,100 Guest-days is a measure of the overall activity at the hotel. For example, a guest who stays at the hotel for three days is counted as three guest-days. 1. Using the high-low method, estimate a cost formula for custodial supplies expense where X is the number of guest-days. 2. Using the cost formula you derived above, what amount of custodial supplies expense would you expect to be incurred at an occupancy level of 4,610 guest-days? a. variable cost b. fixed cost c. total cost
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