EXERCISE 2-14 High-Low Method; Predicting Cost [L02-4, LO2-5] The Lakeshore Hotel's guest-days of occupancy and custodial supplies ex pense over the last seven months were: Guest-Days Custodial Month of Occupancy Supplies Expense March 4,000 $7,500 . R. April May 6,500 $8,250 ... $10,500 $12,000 $13,500 $10,750 $9,750 8,000 June.. 10,500 July 12,000 August .. September 9,000 7,500 Guest-days is a measure of the overall activity at the hotel. For example, a guest who stays at the hotel for three days is counted as three guest-days. Required: 1. Using the high-low method, estimate a cost formula for custodial supplies expense. Using the cost formula you derived above, what amount of custod ial supplies expense would you expect to be incurred at an occupancy level of 11,000 guest-days? 3. 2. Prepare a scattergraph using the data given above. Plot custodial supplies expense on the ver- tical axis and the number of guest-days occupied on the horizontal ax is. Draw a straight line

EXERCISE 2-14 High-Low Method; Predicting Cost [L02-4, LO2-5] The Lakeshore Hotel's guest-days of occupancy and custodial supplies ex pense over the last seven months were: Guest-Days Custodial Month of Occupancy Supplies Expense March 4,000 $7,500 . R. April May 6,500 $8,250 ... $10,500 $12,000 $13,500 $10,750 $9,750 8,000 June.. 10,500 July 12,000 August .. September 9,000 7,500 Guest-days is a measure of the overall activity at the hotel. For example, a guest who stays at the hotel for three days is counted as three guest-days. Required: 1. Using the high-low method, estimate a cost formula for custodial supplies expense. Using the cost formula you derived above, what amount of custod ial supplies expense would you expect to be incurred at an occupancy level of 11,000 guest-days? 3. 2. Prepare a scattergraph using the data given above. Plot custodial supplies expense on the ver- tical axis and the number of guest-days occupied on the horizontal ax is. Draw a straight line

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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