Question
In: Accounting
The Cheyenne Hotel in Big Sky, Montana, has accumulated records of the total electrical costs of...
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 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 | 2,710 | $ | 5,270 | ||
| February | 3,600 | $ | 6,205 | ||
| March | 860 | $ | 2,150 | ||
| April | 2,170 | $ | 4,350 | ||
| May | 4,200 | $ | 7,160 | ||
| June | 1,530 | $ | 3,825 | ||
| July | 4,110 | $ | 7,050 | ||
| August | 4,060 | $ | 6,925 | ||
| September | 1,980 | $ | 4,090 | ||
| October | 1,160 | $ | 2,900 | ||
| November | 1,210 | $ | 3,025 | ||
| December | 2,480 | $ | 4,910 | ||
Required:
1. Using the high-low method, estimate the fixed cost of electricity per month and the variable cost of electricity per occupancy-day. (Do not round your intermediate calculations. Round your Variable cost answer to 2 decimal places and Fixed cost element answer to nearest whole dollar amount.)
Solutions
Expert Solution
| Electrical Costs | ||
| Occupancy-Days | Electrical Costs | |
| High level of activity | 4,200 | $7,160 |
| Low level of activity | 860 | $2,150 |
| Change | 3,340 | $5,010 |
| Variable cost per unit =$5,010 / 3,340 days =$1.50 per Occupancy-Days | ||
| Fixed cost element =$7,160 - (4,200*$1.50) =$860 | ||
ekkarill92 answered 2 years agoRelated Solutions
The Cheyenne Hotel in Big Sky, Montana, has accumulated records of the total electrical costs of...
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 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
2,640
$
13,200
February
2,860
$
14,300
March
980
$
4,900
April
2,420
$
12,100
May
2,090
$
10,450
...
The Cheyenne Hotel in Big Sky, Montana, has accumulated records of the total electrical costs of...
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
3,180
$
6,510
February
2,920
$
6,261
March
3,780
$
7,392
April
2,160
$
5,569...
Exercise 5A-1 High-Low Method [LO5-10] The Cheyenne Hotel in Big Sky, Montana, has accumulated records of...
Exercise 5A-1 High-Low Method [LO5-10]
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 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
3,560
$
6,573
February
3,420
$
6,209
March
4,120
$
7,022
April
1,990
$
5,174
...
The Katz Motel in Nowhere, Kansas, has accumulated records of the total electrical costs of the...
The Katz Motel in Nowhere, Kansas, has accumulated records of
the total electrical costs of the motel and the number of
occupancy-days over the last year. An occupancy-day represents a
room rented for one day. The motel’s business is highly seasonal,
with peaks occurring during the ski season and in the summer.
Month
Occupancy-Days
Electrical Costs
January
3,180
$
6,510
February
2,920
$
6,261
March
3,780
$
7,392
April
2,160
$
5,569
May
650
$
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June
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Please show me step by step. Exercise 6A-1 High-Low Method [LO6-10] The Cheyenne Hotel in Big...
Please show me step by step.
Exercise 6A-1 High-Low Method [LO6-10] 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 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...
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High-Low and Cost Formula
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Low
High
Activity (direct labor hours)
90,000
130,000
Total manufacturing overhead
$484,000
$628,000
The total overhead cost includes variable, fixed, and mixed
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Variable cost
$286,000
Fixed cost
85,000
Semi-mixed cost
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High
Activity (direct labor hours)
30,000
50,000
Total manufacturing overhead
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$362,000
The total overhead cost includes variable, fixed, and mixed
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Variable cost
$200,000
Fixed cost
90,000
Semi-mixed cost
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