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 for one day. The hotel’s business is highly seasonal, with peaks occurring during the ski season and in the summer. MonthOccupancy-DaysElectrical CostsJanuary2,710$ 5,270February3,600$ 6,205March860$ 2,150April2,170$ 4,350May4,200$ 7,160June1,530$ 3,825July4,110$ 7,050August4,060$ 6,925September1,980$ 4,090October1,160$ 2,900November1,210$ 3,025December2,480$ 4,910 Required:1. Using the high-low method, estimate the fixed cost of electricity per month and the variable cost of electricity per occupancy-day. (Do not round your intermediate calculations. Round your Variable cost answer to 2 decimal places and Fixed cost element answer to nearest whole dollar amount.)What is the fixed cost of electricity per month?

We must determine the highest and lowest points in terms of occupancy days and their associated…

Answered: Required: 1. Using the high-low…

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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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 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	2,710	$ 5,270
February	3,600	$ 6,205
March	860	$ 2,150
April	2,170	$ 4,350
May	4,200	$ 7,160
June	1,530	$ 3,825
July	4,110	$ 7,050
August	4,060	$ 6,925
September	1,980	$ 4,090
October	1,160	$ 2,900
November	1,210	$ 3,025
December	2,480	$ 4,910

Required:

1. Using the high-low method, estimate the fixed cost of electricity per month and the variable cost of electricity per occupancy-day. (Do not round your intermediate calculations. Round your Variable cost answer to 2 decimal places and Fixed cost element answer to nearest whole dollar amount.)

What is the fixed cost of electricity per month?

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