The Cheyenne Hotel in Big Sky, Montana, recorded its total electrical costs and 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 2,830 3,340 3,650 1,840 750 1,830 3,890 1,700 4,060 2,260 1,350 290 Electrical Costs $ 6,750 $ 7,410 $ 7,905 $ 5,520 3 41200 $2,250 $5,490 2.400 $ 8,190 2 $ 5,100 Variable cost of electricity Fixed cost of electricity $8,410 $6,780 $ 4,050 $ 870 Required: 1. Using the high-low method, estimate the fixed cost of electricity per month and the variable cost of electricity per occupancy-day. Note: 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? Note: 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
The Cheyenne Hotel in Big Sky, Montana, recorded its total electrical costs and 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 2,830 3,340 3,650 1,840 750 1,830 3,890 1,700 4,060 2,260 1,350 290 Electrical Costs $ 6,750 $ 7,410 $ 7,905 $ 5,520 3 41200 $2,250 $5,490 2.400 $ 8,190 2 $ 5,100 Variable cost of electricity Fixed cost of electricity $8,410 $6,780 $ 4,050 $ 870 Required: 1. Using the high-low method, estimate the fixed cost of electricity per month and the variable cost of electricity per occupancy-day. Note: 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? Note: 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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:The Cheyenne Hotel in Big Sky, Montana, recorded its total electrical costs and 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
2,830
3,340
3,650
1,840
750
1,830
3,890
1,700
4,060
2,260
1,350
290
Electrical
Costs
Variable cost of electricity
Fixed cost of electricity
$ 6,750
$ 7,410
$ 7,905
$ 5,520
$ 2,250
$ 5,490
$ 8,190
$ 5,100
$ 8,410
$ 6,780
$ 4,050
$ 870
Required:
1. Using the high-low method, estimate the fixed cost of electricity per month and the variable cost of electricity per occupancy-day.
Note: 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?
Note: 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.
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