I\'d love any help! I\'ve tried for two days and just can not get the calculatio

Question

I'd love any help! I've tried for two days and just can not get the calculations right.

The Lakeshore Hotel's guest-days of occupancy and custodial supplies expense over the last seven months were:

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.

Using the high-low method, estimate a cost formula for custodial supplies expense where X is the number of guest-days. (Round the variable cost per guest-day to 1 decimal place. Omit the "$" sign in your response.)

Using the cost formula you derived above, what amount of custodial supplies expense would you expect to be incurred at an occupancy level of 4,620 guest-days? (Omit the "$" sign in your response.)

$  

Explanation / Answer

Hi,

Please find the answer as follows:

Requirement 1:

Variable Cost = (27897 - 16800)/(7010 - 2900) = 2.7

Fixed Cost = 27897 - 7010*2.7 = 8970

Equation = 8970 + 2.7X

Requirement 2:

Variable Cost = 4620*2.7 = 12474

Fixed Cost = 8970

Total Cost = 12474 + 8970 = 21444

Thanks.

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