Exercise 3-10 High-Low Method; Predicting Cost (LO2] Prairie Motels has a total of 3,400 rooms in its chain of motels located in eastern Canada. On average, 55% of the rooms are occupied each day. The company's operating costs are $39 per occupied room per day at this occupancy level, assuming a 30-day month. This $39 contains both variable and fixed cost elements. During April, the occupancy rate dropped to only 40%. A total of $2,013,480 in operating cost was incurred during April. Required: 1. Estimate the variable cost per occupied room per day. (Do not round intermediate calculations and round your final answer to 2 decimal places.) Variable cost per room per day
Exercise 3-10 High-Low Method; Predicting Cost (LO2] Prairie Motels has a total of 3,400 rooms in its chain of motels located in eastern Canada. On average, 55% of the rooms are occupied each day. The company's operating costs are $39 per occupied room per day at this occupancy level, assuming a 30-day month. This $39 contains both variable and fixed cost elements. During April, the occupancy rate dropped to only 40%. A total of $2,013,480 in operating cost was incurred during April. Required: 1. Estimate the variable cost per occupied room per day. (Do not round intermediate calculations and round your final answer to 2 decimal places.) Variable cost per room per day
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![Exercise 3-10 High-Low Method; Predicting Cost [LO2]
Prairie Motels has a total of 3,400 rooms in its chain of motels located in eastern Canada. On average, 55% of the rooms are occupied
each day. The company's operating costs are $39 per occupied room per day at this occupancy level, assuming a 30-day month. This
$39 contains both variable and fixed cost elements. During April, the occupancy rate dropped to only 40%. A total of $2,013,480 in
operating cost was incurred during April.
Required:
1. Estimate the variable cost per occupied room per day. (Do not round intermediate calculations and round your final answer to 2
decimal places.)
Variable cost
per room per day
2. Estimate the total fixed operating costs per month.
Fixed operating cost
per month
3. Assume that the occupancy rate increases to 55% during May. What total operating costs would you expect the company to incur in
May? (Do not round intermediate calculations.)
Total expected operating cost](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F517c093b-3e51-490c-a74b-f2bff995cd4c%2F2078dd6a-12d5-4fd7-b760-e93a9ce88527%2Fsh82i52_processed.png&w=3840&q=75)
Transcribed Image Text:Exercise 3-10 High-Low Method; Predicting Cost [LO2]
Prairie Motels has a total of 3,400 rooms in its chain of motels located in eastern Canada. On average, 55% of the rooms are occupied
each day. The company's operating costs are $39 per occupied room per day at this occupancy level, assuming a 30-day month. This
$39 contains both variable and fixed cost elements. During April, the occupancy rate dropped to only 40%. A total of $2,013,480 in
operating cost was incurred during April.
Required:
1. Estimate the variable cost per occupied room per day. (Do not round intermediate calculations and round your final answer to 2
decimal places.)
Variable cost
per room per day
2. Estimate the total fixed operating costs per month.
Fixed operating cost
per month
3. Assume that the occupancy rate increases to 55% during May. What total operating costs would you expect the company to incur in
May? (Do not round intermediate calculations.)
Total expected operating cost
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education