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Problem - Beaches Resort is an all-inclusive resort located in the Caribbean. The business is highly seasonal, with peaks occuring during spring and late fall. Following is the data for the past year of the resort's total electrical costs and the number of occupancy days.
Month
Occupancy-Days
Electrical Costs
January
4,260
$15,082
February
3,650
$14,112
March
3,160
$13,272
April
2,150
$9,030
May
2,260
$9,492
June
1,450
$6,090
July
3,180
$13,356
August
3,750
$14,532
September
2,220
$9,324
October
1,580
$6,636
November
1,690
$7,098
December
2,750
$11,550
Required -
1. Using the high-low method, estimate the fixed cost of electricity per month and the variable cost of electricity per occupancy-day.
2. What other factors in addition to occupancy-days are likely to affect the variation in electricity costs from month to month?
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