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. Electrical Costs Month Occupancy- Days January 540 $ 1,620 February 3,810 $ 8,352 March 4,100 $ 8,736 April 1,730 $ 5,190 May 3,520 $ 7,968 June 1,320 $ 3,960 July 3,420 $ 7,668 August 4,120 $ 8,780 September 1,610 $ 4,830 October 830 $ 2,490 November December 1,420 2,320 $ 4,260 $ 6,960 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.) Variable cost of electricity per occupancy-day Fixed cost of electricity per month

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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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.
Electrical
Costs
Month
Occupancy-
Days
January
540
$ 1,620
February
3,810
$ 8,352
March
4,100
$ 8,736
April
1,730
$ 5,190
May
3,520
$ 7,968
June
1,320
$ 3,960
July
3,420
$ 7,668
August
4,120
$ 8,780
September
1,610
$ 4,830
October
830
$ 2,490
November
December
1,420
2,320
$ 4,260
$ 6,960
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.)
Variable cost of electricity
per occupancy-day
Fixed cost of electricity
per month
Transcribed Image Text: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. Electrical Costs Month Occupancy- Days January 540 $ 1,620 February 3,810 $ 8,352 March 4,100 $ 8,736 April 1,730 $ 5,190 May 3,520 $ 7,968 June 1,320 $ 3,960 July 3,420 $ 7,668 August 4,120 $ 8,780 September 1,610 $ 4,830 October 830 $ 2,490 November December 1,420 2,320 $ 4,260 $ 6,960 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.) Variable cost of electricity per occupancy-day Fixed cost of electricity per month
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