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 January February March April May June July August September October November December Occupancy- Days 2,710 3,600 860 2,170 4,200 1,530 4,110 4,060 1,980 1,160 1,210 2,480 Electrical Costs $5,270 $ 6,205 $ 2,150 Variable cost of electricity Fixed cost of electricity $4,350 $7,160 $ 3,825 $7,050 $ 6,925 $4,090 $ 2,900 $3,025 $ 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.) per occupancy-day per month 2. What other factors in addition to occupancy-days are likely to affect the variation in electrical costs from month to month? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.) ? Systematic factors like guests, switching off fans and lights. ? Number of days present in a month. ?Income taxes paid on hotel income. ? Seasonal factors like winter or summer. ? Fixed salary paid to hotel receptionist.
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 January February March April May June July August September October November December Occupancy- Days 2,710 3,600 860 2,170 4,200 1,530 4,110 4,060 1,980 1,160 1,210 2,480 Electrical Costs $5,270 $ 6,205 $ 2,150 Variable cost of electricity Fixed cost of electricity $4,350 $7,160 $ 3,825 $7,050 $ 6,925 $4,090 $ 2,900 $3,025 $ 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.) per occupancy-day per month 2. What other factors in addition to occupancy-days are likely to affect the variation in electrical costs from month to month? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.) ? Systematic factors like guests, switching off fans and lights. ? Number of days present in a month. ?Income taxes paid on hotel income. ? Seasonal factors like winter or summer. ? Fixed salary paid to hotel receptionist.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
Occupancy- Electrical
Days
January
2,710
$5,270
February
3,600
$ 6,205
March
860
$ 2,150
April
2,170
$ 4,350
Ell
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
1,160
$ 2,900
1,210
$ 3,025
2,480
Month
October
November
December
Costs
Variable cost of electricity
Fixed cost of electricity
$ 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.)
per occupancy-day
per month
2. What other factors in addition to occupancy-days are likely to affect the variation in electrical costs from month to
month? (You may select more than one answer. Single click the box with the question mark to produce a check
mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.
Any boxes left with a question mark will be automatically graded as incorrect.)
? Systematic factors like guests, switching off fans and lights.
? Number of days present in a month.
? Income taxes paid on hotel income.
? Seasonal factors like winter or summer.
? Fixed salary paid to hotel receptionist.
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