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The Peak View Hotel's occupancy-days and custodial supplies expense over the last seven months were as follows: Custodial Occupancy- Supplies Month Days Expense March 19,900 $24,280 April 14,400 23,735 May 16,900 22,815 June 31,400 31,995 July 25,900 29,285 August 20,900 25,030 September 16,400 23,505 Occupancy-days are a measure of the overall activity at the hotel. For example, when a guest stays at the hotel for three days, it is counted as three occupancy-days.

The Peak View Hotel's occupancy-days and custodial supplies expense over the last seven months were as follows: Custodial Occupancy- Supplies Month Days Expense March 19,900 $24,280 April 14,400 23,735 May 16,900 22,815 June 31,400 31,995 July 25,900 29,285 August 20,900 25,030 September 16,400 23,505 Occupancy-days are a measure of the overall activity at the hotel. For example, when a guest stays at the hotel for three days, it is counted as three occupancy-days.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The Peak View Hotel's occupancy-days and custodial supplies expense over the last seven months were as follows: Custodial Occupancy- Supplies Month Days Expense March 19,900 $24,280 April May 14,400 23,735 16,900 22,815 June 31,400 31,995 July August 25,900 29,285 20,900 25,030 September 16,400 23,505 Occupancy-days are a measure of the overall activity at the hotel. For example, when a guest stays at the hotel for three days, it is counted as three occupancy-days. Required: 1. Using the high-low method, estimate a cost formula for custodial supplies expense. (Round the "Fixed cost" to the nearest dollar amount and "Variable cost" to 2 decimal places.) Y = X 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 15,800 occupancy-days? (In your computations, round "Variable cost per unit" to 2 decimal places and final answers to the nearest dollar amount.) Variable cost Fixed cost Total cost Amount
Transcribed Image Text:The Peak View Hotel's occupancy-days and custodial supplies expense over the last seven months were as follows: Custodial Occupancy- Supplies Month Days Expense March 19,900 $24,280 April May 14,400 23,735 16,900 22,815 June 31,400 31,995 July August 25,900 29,285 20,900 25,030 September 16,400 23,505 Occupancy-days are a measure of the overall activity at the hotel. For example, when a guest stays at the hotel for three days, it is counted as three occupancy-days. Required: 1. Using the high-low method, estimate a cost formula for custodial supplies expense. (Round the "Fixed cost" to the nearest dollar amount and "Variable cost" to 2 decimal places.) Y = X 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 15,800 occupancy-days? (In your computations, round "Variable cost per unit" to 2 decimal places and final answers to the nearest dollar amount.) Variable cost Fixed cost Total cost Amount
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