Reference no: EM132556638

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

Month     Occupancy-Days        Custodial Supplies Expense

March             10,800                       $14,580

April             11,000                         14,700

May              12,300                          15,780

June             20,500                           20,400

July             29,400                             25,740

August         20,400                             18,990

September   16,300                              17,230

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:

Question 1: Using the high-low method, estimate a cost formula for custodial supplies expense. (Round the "Variable cost" to 2 decimal places.)

Question 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 15,600 occupancy-days?