Estimate the fixed cost of electricity per month

Reference no: EM131017575

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	1,736	$4,127
February	1,904	$4,207
March	2,356	$5,083
April	960	$2,857
May	360	$1,871
June	744	$2,696
July	2,108	$4,670
August	2,406	$5,148
September	840	$2,691
October	124	$1,588
November	720	$2,454
December	1364	$3,529

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 other than occupancy-days are likely to affect the variation in electrical costs from month tomonth?

Reference no: EM131017575

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