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Exercise $5$A$-1($Algo$)$ High$-$Low Method $[$LO$5-10]$

The Cheyenne Hotel in Big Sky$,$ Montana, recorded its total electrical costs and number of occupancy$-$days over the last year. An occupancy$-$day represents a room rented 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 $3,250$ $ $9,660$

February $3,470$ $ $10,185$

March $3,660$ $ $10,360$

April $1,760$ $ $6,160$

May $1,350$ $ $4,725$

June $4,350$ $ $11,575$

July $3,280$ $ $9,765$

August $1,610$ $ $5,635$

September $700$ $ $2,450$

October $1,300$ $ $4,550$

November $1,640$ $ $5,740$

December $2,220$ $ $7,770$

Required:

Using the high$-$low method, estimate the fixed cost of electricity per month and the variable cost of electricity per occupancy$-$day.

Note: Do not round your intermediate calculations. Round your Variable cost answer to $2$ decimal places and Fixed cost element answer to nearest whole dollar amount.

What other factors in addition to occupancy$-$days are likely to affect the variation in electrical costs from month to month?

Note: You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.

check all that apply

Systematic factors like guests, switching off fans and lights.unanswered

Number of days present in a month.

Income taxes paid on hotel income.unanswered

Seasonal factors like winter or summer.unanswered

Fixed salary paid to hotel receptionist.unansweredThe Cheyenne Hotel in Big Sky$,$ Montana, recorded its total electrical costs and number of occupancy$-$days over the last year. An

occupancy$-$day represents a room rented for one day. The hotel's business is highly seasonal, with peaks occurring during the ski

season and in the summer.

Required:

Using the high$-$low method, estimate the fixed cost of electricity per month and the variable cost of electricity per occupancy$-$day.

Note: Do not round your intermediate calculations. Round your Variable cost answer to $2$ decimal places and Fixed cost

element answer to nearest whole dollar amount.

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