Chapter 6.A, Problem 1E

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 hotels business is highly seasonal, with peaks occurringduring the ski season and in the summer.

Required:
1. Using the high-low method. Estimate the fixed cost of electricity per month and the variable cost of electricity per occupancy-day.
Round off the fixed cost to the nearest whole dollar and the variable cost to the nearest whole cent.
2. What other factors in addition to occupancy-days are likely to affect the variation in electrical costs from month to month?