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You are an accountant for a hotel chain and your boss has asked you to estimate the cost functionfor one of the firms economy lodging

You are an accountant for a hotel chain and your boss has asked you to estimate the cost functionfor one of the firms economy lodging properties. Hotels in this segment have only one output: the provision of hotel rooms for overnight stays. The 110-room hotel you will examine is a 2-level wood building with exterior room access, located in Joplin, Missouri.On Canvas,download Data.xlsx, a file containing nine years of monthly data for the years 2012-2020. Table 1 lists the variable names and a brief description of each variable. Since these data has been collected over many years, monetary amountsmust be adjusted since $1 spent today buys less than $1 spent in 2012. The U.S. Bureau of Labor Statisticsestimates consumer prices monthly and Table 2contains their average annual consumer price index (CPI).It is possible to complete this project using Excel or, preferably, a statistical software package (e.g., R).1Required1.What is the cost object?2.What is the cost driver? 4.Plot the relationship between total expenses and rooms rented. Do costs behave as you expect? Are there unusual observations? Using the visual fit, or scattergraph method, what is your estimate of the monthly cost equation?5.Using the high-low method, estimate the hotels cost function. What is the monthly cost equation?36.Using regression analysis, estimate the hotels cost function (i.e., regress TotalCostonto Rentals). What is the monthly cost equation? Assess your model in terms of economic plausibility and goodness of fit.

year month electric gas water totalCost rentals hdd cdd
2012 1 5725 1017 3758 62279 2445 546 3
2012 2 3269 897 1576 49923 2341 424 7
2012 3 4973 1582 1674 59918 2738 254 13
2012 4 1242 989 1618 51098 2395 46 144
2012 5 2877 813 1069 55843 2780 0 435
2012 6 4129 1014 2423 42756 2619 0 472
2012 7 4385 893 2532 54952 2923 0 530
2012 8 3216 835 2011 52570 2783 0 587
2012 9 2742 666 1755 47282 2151 0 333
2012 10 2312 699 1873 47798 2314 20 165
2012 11 2272 1019 1609 50030 2046 178 97
2012 12 1888 776 1634 32506 1971 420 7
2013 1 3389 1159 1870 49833 2036 406 19
2013 2 2939 923 1678 45903 2603 445 0
2013 3 3729 1180 1921 58680 2636 74 70
2013 4 1482 1204 1763 49301 2112 54 106
2013 5 3005 597 1536 53361 2573 2 325
2013 6 4376 1148 1993 55270 2452 0 450
2013 7 3743 1153 2125 49896 2739 0 526
2013 8 4890 1145 1997 58947 2749 0 531
2013 9 3505 954 2108 48218 2607 0 409
2013 10 3553 879 2080 52882 2622 4 320
2013 11 4023 1574 0 47757 2407 188 14
2013 12 7774 1371 2099 60151 2520 460 4
2014 1 1403 1627 6385 54455 2485 365 39
2014 2 3634 512 3004 53920 2508 271 8
2014 3 2499 1663 2120 55174 2996 202 28
2014 4 2069 1396 1845 60371 2700 45 104
2014 5 3617 991 2192 64136 2529 9 313
2014 6 4153 980 2244 62607 2843 0 541
2014 7 5282 1250 2304 56413 3070 0 614
2014 8 3941 826 2128 56669 2714 0 622
2014 9 4142 1433 2432 54023 2655 0 582
2014 10 4380 1638 2503 58428 2969 57 208
2014 11 2825 1724 2551 46826 2608 172 117
2014 12 3633 981 2736 53077 2417 457 5
2015 1 3036 1334 2231 54660 2632 283 2
2015 2 2893 1236 2300 50786 2661 343 13
2015 3 5412 1418 2830 72850 2854 111 107
2015 4 2475 941 2254 51049 2863 3 290
2015 5 5585 1115 2170 70094 3171 0 369
2015 6 5209 904 2409 67366 2991 0 495
2015 7 5323 858 2496 63023 2976 0 609
2015 8 5568 795 2302 55533 2673 0 679
2015 9 4505 665 2259 46260 2551 0 417
2015 10 4626 751 2032 53355 2376 38 220
2015 11 4739 1082 1920 46169 2597 182 63
2015 12 3992 1130 2179 47696 2427 408 15
2016 1 2428 1269 1919 61257 2487 596 2
2016 2 5291 1706 1935 61492 2433 380 5
2016 3 7938 1706 4835 80011 3015 149 84
2016 4 3902 1338 76 60351 2788 122 60
2016 5 3485 1248 2099 71895 2782 0 286
2016 6 4518 1012 2333 86843 2330 0 443
2016 7 4099 853 2660 88829 2526 0 458
2016 8 4825 885 3008 81291 2834 0 567
2016 9 4187 858 3157 64100 2692 0 417
2016 10 4590 953 3691 83303 2710 55 220
2016 11 2561 1293 3839 62889 2341 205 61
2017 1 3013 758 2119 81501 2210 545 11
2017 2 3309 1132 2203 70831 1928 287 19
2017 3 4324 1261 3036 85960 2978 190 61
2017 4 2555 1654 1821 79172 2853 76 134
2017 5 4207 1530 2256 78144 2980 0 374
2017 6 6154 1975 2529 71573 3041 0 619
2017 7 5118 2007 2327 80843 3169 0 586
2017 8 5778 867 2633 96057 3076 0 610
2017 9 3993 1093 2547 62836 2733 0 390
2017 10 4399 1421 3476 68859 2666 40 149
2017 11 2912 844 2317 77587 2578 195 50
2017 12 5037 1206 4560 77763 2119 430 18
2018 1 1773 1205 2074 61611 2129 458 17
2018 2 3634 981 3902 65862 2207 208 42
2018 3 3331 1152 2775 79746 2596 173 98
2018 4 3260 563 2532 56056 2269 56 143
2018 5 3253 577 3929 74362 2424 0 371
2018 6 5368 551 3665 74954 2373 0 591
2018 7 4954 582 3905 76560 2458 0 712
2018 8 5123 448 4121 72029 1993 0 686
2018 9 4087 461 4133 71412 2163 3 380
2018 10 3544 678 3096 60139 2345 69 162
2018 11 2634 758 2240 65817 2113 182 10
2018 12 5088 771 2715 54543 1964 573 2
2019 1 6418 1103 2009 63131 2105 568 1
2019 2 3929 1241 2760 61767 2285 526 0
2019 3 4014 813 3241 58452 2826 259 3
2019 4 2882 838 1671 56497 2191 32 109
2019 5 4222 683 2470 54284 2485 0 400
2019 6 4546 934 2878 61048 2480 0 558
2019 7 4616 748 2528 61558 2630 0 597
2019 8 6107 687 2470 67285 2778 0 684
2019 9 4143 617 1773 64625 2640 0 458
2019 10 3873 582 2088 63124 2835 38 131
2019 11 3235 709 2401 64943 2638 224 75
2019 12 3004 918 1794 47555 2485 418 3
2020 1 4319 1064 1978 67229 2482 554 1
2020 2 5934 918 1594 58403 2646 383 57
2020 3 2606 930 2425 61492 3042 136 118
2020 4 3202 715 2070 61030 2537 21 292
2020 5 3682 724 1936 65093 2538 21 376
2020 6 5349 730 3011 71457 2730 0 617
2020 7 5496 633 2869 67379 2786 0 661
2020 8 6123 630 3157 69181 2719 0 730
2020 9 5208 558 2403 76737 2862 0 465
2020 10 3991 724 2525 62214 2798 53 164
2020 11 3203 85 2235 66623 2406 215 91
2020 12 3170 1651 2449 62336 2407 418 6

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