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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?
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