80.2K

Verified Solution

Link Copied!

The Cheyenne Hotel in Big Sky, Montana, has accumulated recordsof the total electrical costs of the hotel and the number ofoccupancy-days over the last year. An occupancy-day represents aroom rented out for one day. The hotel's business is highlyseasonal, with peaks occurring during the ski season and in thesummer.

Month	Occupancy- Days	Electrical Costs
January	3,180	$	6,510
February	2,920	$	6,261
March	3,780	$	7,392
April	2,160	$	5,569
May	650	$	1,820
June	2,050	$	5,261
July	4,050	$	7,829
August	4,070	$	7,896
September	1,780	$	4,984
October	570	$	1,596
November	1,580	$	4,424
December	2,680	$	5,908

Required:
1.	Using the high-low method, estimate the fixed cost ofelectricity per month and the variable cost of electricity peroccupancy-day. (Do not round your intermediatecalculations. Round your Variable cost answer to 2 decimal placesand Fixed cost element answer to nearest whole dollaramount)

     

	Occupancy Electrical Days Costs High activity level Low activity level Change Variable cost per occupancy-day Fixed cost element

2.	What other factors other than occupancy-days are likely toaffect the variation in electrical costs from month to month?(You may select more than one answer. Single click the boxwith the question mark to produce a check mark for a correctanswers and double click the box with the question mark to emptythe box for a wrong answers.)
	Seasonal factors like winter or summer.unchecked Number of days present in a month.unchecked Systematic factors like guests, switching off fans andlights.unchecked Income taxes paid on hotel income.