You have been appointed the new management accountant for the Hilton Garden Inn Corvallis which is a 153 room three star hotel opposite Reser Stadium. Your first job is to do an analysis of future labor expense - which is the largest expense category for the hotel. Below is the data for the hotel labor expenses and hotel occupancy rate (room nights total number of rooms occupied for the month) for the past 11 months:

Month	Occupancy Rate (x)	Hotel Labor Expense (y)
January 2015	4000	$55,000
February 2015	3550	$51,000
March 2015	3600	$52,000
April 2015	3200	$48,000
May 2015	No Data	No Data
June 2014	3902	$55,000
July 2014	3800	$53,000
August 2014	3900	$47,000
September 2014	4100	$55,000
October 2014	4132	$57,000
November 2014	4000	$54,000
December 2014	4269	$59,000

The hotel sales office noticed an increase in the number of summer festivals in the Corvallis area in July and August so they estimate hotel monthly occupancy (room nights) for June, July and August to be:

Month	Expected Occupancy
June	3900
July	4000
August	4100

1. Using the high-low method, you estimate a cost equation for predicting labor expenses based on occupancy rates. What equation do you get

2. Using the previous 11 months of data you do a regression analysis on Excel to estimate the relationship between occupancy rates and hotel labor expenses. What equation do you get? Does the data appear to be sound or do you see a potential data problem? Compare the regression equation with the high-low method equation. Which is better? Explain why