The Lakeshore Hotel's guest-days of occupancy and custodial supplies expense over the last seven months were: Month March April May June July August September Guest Days of Occupancy 4,000 6.500 8,000 10,500 12,000 9,000 7,500 Custodial Supplies Expense $7,500 $8.250 $10,500 $12,000 $13,500 $10,750 $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?
The Lakeshore Hotel's guest-days of occupancy and custodial supplies expense over the last seven months were: Month March April May June July August September Guest Days of Occupancy 4,000 6.500 8,000 10,500 12,000 9,000 7,500 Custodial Supplies Expense $7,500 $8.250 $10,500 $12,000 $13,500 $10,750 $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?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Homework EXERCISE 2-14 High-Low Method; Predicting Cost The Lakeshore Hotel's guest-days of occupancy and custodial supplies expense over the last seven months were: Month March April May June July August September Guest Days of Occupancy 4,000 6.500 8,000 10,500 12,000 9,000 7,500 Custodial Supplies Expense $7,500 $8.250 $10,500 $12,000 $13,500 $10,750 $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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