Required: 1. Using the high-low method, estimate the fixed cost of electricity per month and the variable cost of electricity per occupancy-day. (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 is the fixed cost of electricity per month?
Required: 1. Using the high-low method, estimate the fixed cost of electricity per month and the variable cost of electricity per occupancy-day. (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 is the fixed cost of electricity per month?
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter3: Cost Behavior
Section: Chapter Questions
Problem 10E: SmokeCity, Inc., manufactures barbeque smokers. Based on past experience, SmokeCity has found that...
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Question
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 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 | 2,710 | $ 5,270 |
February | 3,600 | $ 6,205 |
March | 860 | $ 2,150 |
April | 2,170 | $ 4,350 |
May | 4,200 | $ 7,160 |
June | 1,530 | $ 3,825 |
July | 4,110 | $ 7,050 |
August | 4,060 | $ 6,925 |
September | 1,980 | $ 4,090 |
October | 1,160 | $ 2,900 |
November | 1,210 | $ 3,025 |
December | 2,480 | $ 4,910 |
Required:
1. Using the high-low method, estimate the fixed cost of electricity per month and the variable cost of electricity per occupancy-day. (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 is the fixed cost of electricity per month?
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