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