Introduction To Managerial Accounting
8th Edition
ISBN: 9781259917066
Author: BREWER, Peter C., Garrison, Ray H., Noreen, Eric W.
Publisher: Mcgraw-hill Education,
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Chapter 6.A, Problem 1E
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 hotels business is highly seasonal, with peaks occurringduring the ski season and in the summer.
Required:
1. 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.
2. What other factors in addition to occupancy-days are likely to affect the variation in electrical costs from month to month?
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The Cheyenne Hotel in Big Sky, Montana, has accumulated records of the total electrical costs of the hoteland the number of occupancy-days over the last year. An occupancy-day represents a room rented out for oneday. The hotel’s business is highly seasonal, with peaks occurring during the ski season and in the summer.Month Occupancy-Days Electrical CostsJanuary ..................... 1,736 $4,127February .................... 1,904 $4,207March ........................ 2,356 $5,083April ........................... 960 $2,857May ........................... 360 $1,871June .......................... 744 $2,696July ............................ 2,108 $4,670August ....................... 2,406 $5,148September ................ 840 $2,691October ..................... 124 $1,588November ................. 720 $2,454December ................. 1,364 $3,529Required:1. Using the high-low method, estimate the fixed cost of electricity per month and the variable cost ofelectricity per occupancy-day.…
The Cullumber Acres Inn is trying to determine its break-even point during its off-peak season. The inn has 50 rooms that it rents at $100 a night. Operating costs are as follows:
Salaries
$7,500
per month
Utilities
$1,000
per month
Depreciation
$1,100
per month
Maintenance
$2,940
per month
Maid service
$24
per room
Other costs
$46
per room
Determine the inn’s break-even point in number of rented rooms per month.
Break-even point
enter the break-even point in number of rented rooms
rooms
Determine the inn’s break-even point in dollars.
Break-even point in
$enter the break-even point in dollars
The Carla Vista Acres Inn is trying to determine its break-even point during its off-peak season. The inn has 50 rooms that it rents at $40 a night. Operating costs are as follows:
Salaries
$5,000
per month
Utilities
$1,100
per month
Depreciation
$1,200
per month
Maintenance
$780
per month
Maid service
$7
per room
Other costs
$13
per room
(A) Determine the inn’s break-even point in number of rented rooms per month.
Break-even point
enter the break-even point in number of rented rooms
rooms
(B) Determine the inn’s break-even point in dollars.
Break-even point in
$enter the break-even point in dollars
Chapter 6 Solutions
Introduction To Managerial Accounting
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