Question
The Lakeshore Hotel's occupancy-days and custodial supplies expense over the last seven months were as follows: Month OccupancyDays Custodial Supplies Expense March 18,000 $22,500 April
The Lakeshore Hotel's occupancy-days and custodial supplies expense over the last seven months were as follows: Month OccupancyDays Custodial Supplies Expense
March | 18,000 | $22,500 |
April | 12,500 | 20,850 |
May | 15,000 | 20,250 |
June | 28,500 | 28,850 |
July | 24,000 | 27,100 |
August | 19,000 | 22,750 |
September | 14,500 | 20,750 |
Occupancy-days are a measure of the overall activity at the hotel. For example, when a guest stays at the hotel for three days, it is counted as three occupancy days. Required:
1. Using the high-low method, estimate a cost formula for custodial supplies expense. (Round the "Variable cost" to 2 decimal places.)
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 13,000 occupancy-days? (Do not round intermediate calculations.)
Amount | |
Variable Cost | |
Fixed Cost | |
Total Cost |
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