The following information applies to the questions displayed below.] The Cheyenn
ID: 2434875 • Letter: T
Question
The following information applies to the questions displayed below.]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 out for one day. The hotel's business is highly seasonal, with peaks occurring during the ski season and in the summer.
Month Occupancy-
Days Electrical
Costs
January 2,602 $6,257
February 2,877 $6,535
March 4,360 $8,082
April 1,445 $4,025
May 430 $2,283
June 1,127 $3,594
July 3,174 $7,272
August 4,410 $8,147
September 1,264 $3,709
October 310 $1,714
November 1,037 $3,317
December 2,033 $5,181
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Requirement 1:
Using the high-low method, estimate the variable cost of electricity per occupancy-day and the fixed cost of electricity per month. (Round the fixed cost to the nearest whole dollar and the variable cost to 2 decimal places. Omit the "$" sign in your response.)
Variable cost $ per occupancy day
Fixed cost $ per month
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Requirement 2:
Which of the following statement(s) is true? (Select all that apply.)
a. Less systematic factors such as frugality of individual guests may also affect electrical costs
b. Electrical cost may reflect seasonal factors other than just the variation in occupancy days
c. Fixed cost will not be affected by the number of days in a month
Explanation / Answer
Month Occupancy- Electrical Days Costs January 2,602 $6,257 February 2,877 $6,535 March 4,360 $8,082 April 1,445 $4,025 May 430 $2,283 June 1,127 $3,594 July 3,174 $7,272 August 4,410 $8,147 September 1,264 $3,709 October 310 $1,714 November 1,037 $3,317 December 2,033 $5,181 -------------------------------------------------------------------------------- Requirement 1: Using the high-low method, estimate the variable cost of electricity per occupancy-day and the fixed cost of electricity per month. (Round the fixed cost to the nearest whole dollar and the variable cost to 2 decimal places. Omit the "$" sign in your response.) High level 4,410 $8,147 Lowest level 310 $1,714 Difference 4100 6,433 Variable cost $ per occupancy day = 6.433 / 4,100 = $1.57 Fixed cost $ per month = $1,227 -------------------------------------------------------------------------------- Requirement 2: Which of the following statement(s) is true? (Select all that apply.) a. Less systematic factors such as frugality of individual guests may also affect electrical costs b. Electrical cost may reflect seasonal factors other than just the variation in occupancy days
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