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 | 2,640 | $13,200 || February | 2,860 | $14,300 || March | 980 | $4,900 || April | 2,420 | $12,100 || May | 2,090 | $10,450 || June | 4,470 | $18,860 || July | 4,020 | $17,160 || August | 3,940 | $16,760 || September | 1,630 | $8,150 || October | 1,090 | $5,450 || November | 1,390 | $6,950 || December | 2,910 | $14,550 |The table portrays the correlation between the number of occupancy-days and the corresponding electrical costs for each month. The data shows increased occupancy and electrical costs during peak seasons, reflecting the hotel's seasonal business pattern. **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 |

Variable cost is the cost that changes with change in the activity of cost driver used. The variable…

Answered: The Cheyenne Hotel in Big Sky, Montana,…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

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. Month Occupancy-Days Electrical Costs January 3,180 $ 6,510 February 2,920 $ 6,261 March 3,780 $ 7,392 April $ 5,569 May $ 1,820 June 2,050 $ 5,261 July 4,050 $ 7,829 August 4,070 $ 7,896 September 1,780 $ 4,984 October 570 $ 1,596 $4,424 $5,908 Using the high-low method, estimate the fixed cost of electricity per month and the variable cost of electricity per occupancy-day. 2,160 650 November 1,580 December 2,680

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