Question
The Lakeshore Hotel's occupancy-days and custodial supplies expense over the last seven months were as follows: Month Occupancy-Days Custodial Supplies ExpenseMarch18,650$19,180April13,02019,300May15,78021,580June30,45025,900July27,90030,340August19,40023,890September15,80022,430 Occupancy-days are a measure
The Lakeshore Hotel's occupancy-days and custodial supplies expense over the last seven months were as follows:
Month
Occupancy-Days Custodial Supplies
ExpenseMarch18,650$19,180April13,02019,300May15,78021,580June30,45025,900July27,90030,340August19,40023,890September15,80022,430
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 "Fixed cost" to the nearest dollar amount and "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 14,600 occupancy-days?(In your computations, round "Variable cost per unit" to 2 decimal places and final answers to the nearest dollar amount.)
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