Estimate the fixed cost of electricity per month

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Reference no: EM131017575

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

1364

$3,529

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

Reference no: EM131017575

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