Estimate the fixed cost of electricity per month

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Problem - Beaches Resort is an all-inclusive resort located in the Caribbean. The business is highly seasonal, with peaks occuring during spring and late fall. Following is the data for the past year of the resort's total electrical costs and the number of occupancy days.

Month

Occupancy-Days

Electrical Costs

January

4,260

$15,082

February

3,650

$14,112

March

3,160

$13,272

April

2,150

$9,030

May

2,260

$9,492

June

1,450

$6,090

July

3,180

$13,356

August

3,750

$14,532

September

2,220

$9,324

October

1,580

$6,636

November

1,690

$7,098

December

2,750

$11,550

Required -

1. Using the high-low method, estimate the fixed cost of electricity per month and the variable cost of electricity per occupancy-day.

2. What other factors in addition to occupancy-days are likely to affect the variation in electricity costs from month to month?

Reference no: EM133050154

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