Question
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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