The Lakeshore Hotel’s guest-days of occupancy and custodial supplies expense over the last sevenmonths were:Guest-Days of Custodial SuppliesMonth Occupancy ExpenseMarch ............................ 4,000 $7,500April ............................... 6,500 $8,250May ............................... 8,000 $10,500June .............................. 10,500 $12,000July ................................ 12,000 $13,500August ........................... 9,000 $10,750September .................... 7,500 $9,750Guest-days is a measure of the overall activity at the hotel. For example, a guest who stays at the hotelfor three days is counted as three guest-days.Required:1. Using the high-low method, estimate a cost formula for custodial supplies expense.2. Using the cost formula you derived above, what amount of custodial supplies expense would youexpect to be incurred at an occupancy level of 11,000 guest-days?
The Lakeshore Hotel’s guest-days of occupancy and custodial supplies expense over the last seven
months were:
Guest-Days of Custodial Supplies
Month Occupancy Expense
March ............................ 4,000 $7,500
April ............................... 6,500 $8,250
May ............................... 8,000 $10,500
June .............................. 10,500 $12,000
July ................................ 12,000 $13,500
August ........................... 9,000 $10,750
September .................... 7,500 $9,750
Guest-days is a measure of the overall activity at the hotel. For example, a guest who stays at the hotel
for three days is counted as three guest-days.
Required:
1. Using the high-low method, estimate a cost formula for custodial supplies expense.
2. Using the cost formula you derived above, what amount of custodial supplies expense would you
expect to be incurred at an occupancy level of 11,000 guest-days?
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