Required: Using the high-low method, estimate the fixed cost of electricity per month and the variable cost of electricity per occupancy-day. Round off the fixed cost to the nearest whole dollar and the variable cost to the nearest whole cent.
The Cheyenne Hotel in Big Sky, Montana, has accumulated records of the total electrical costs of the hotel and the number of occupancy-days over the last year. An occupancy-day represents a room rented out for one day. The hotel’s business is highly seasonal, with peaks occurring during the ski season and in the summer.
Month Occupancy-Days Electrical Costs
January. . . . . . . . . . . . 1,736 $4,127
February . . . . . . . . . . . 1,904 $4,207
March . . . . . . . . . . . . . 2,356 $5,083
April . . . . . . . . . . . . . . 960 $2,857
May. . . . . . . . . . . . . . . 360 $1,871
June . . . . . . . . . . . . . . 744 $2,696
July . . . . . . . . . . . . . . . 2,108 $4,670
August. . . . . . . . . . . . . 2,406 $5,148
September . . . . . . . . . 840 $2,691
October. . . . . . . . . . . . 124 $1,588
November . . . . . . . . . . 720 $2,454
December. . . . . . . . . . 1,364 $3,529
Required:
Using the high-low method, estimate the fixed cost of electricity per month and the variable cost of electricity per occupancy-day. Round off the fixed cost to the nearest whole dollar and the variable cost to the nearest whole cent.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
