The Lakeshore Hotel's guest-days of Occupancy and custodial supplies expense over the last seven months were.

Month Guest day Occupancy Custodial Supplies Expense

March . 4,000 7,500

April . 6,500 8,250

May . 8,000 10,500

June . 10,500 12,000

July . 12,000 13,500

August . 9,000 10,750

September . 7,500 9,750

Guest- day is measaured 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.

Questions:

I. Using the high-low method, estimate a cost formula for custodial supplies expense.

2. Using the cost formula you derived above, what amount of custodial supplies expenses would you expect to be incurred at an occupancy level of 11,000 guest days?

3.Prepare scattergrap using the data given above.plot custodial supplies expense on the vertical axis and the number of guest days occupied on the horizontal axis.draw straight line through the two data points that correspond to the high and low levels of activitivity.make sure your line intersects the Y-axis.

4. Comment on the accuracy of your high low estimates assuming a least squares regression analysis estimated the total fixed cost to be $3.973.10 per month and the variable cost to be $0.77 per guest day. How would the straight line that you drew in requirement 3 differ from a straight line that minimizes the sum of the squared errors?

5. Using the least squares regression estimates given in requirement 4,what custodial supplies expense would you expect to be incurred at occupancy level of 11.000 guest-days?