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The Edelweiss Hotel in Vail, Colorado, 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 . . . . . . . . .
2604
6257
February . . . . . . . .
2856
6550
March . . . . . . . . . . .
3534
7986
April . . . . . . . . . . .
1440
4022
May . . . . . . . . . . . .
540
2289
June . . . . . . . . . . .
1116
3591
July . . . . . . . . . . . . .
3162
7264
August . . . . . . . . .
3608
8111
September . . . . . .
1260
3707
October . . . . . . . . .
186
1712
November . . . . . . .
1080
3321
December . . . . . . .
2046
5196
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 other than occupancy-days are likely to affect the variation in electrical costs from month to month?
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