Question

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
May	650	$	1,820
June	2,050	$	5,261
July	4,050	$	7,829
August	4,070	$	7,896
September	1,780	$	4,984
October	570	$	1,596
November	1,580	$	4,424
December	2,680	$	5,908

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)

     

	Occupancy Electrical Days Costs High activity level Low activity level Change Variable cost per occupancy-day Fixed cost element

2.	What other factors other than occupancy-days are likely to affect the variation in electrical costs from month to month? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answers and double click the box with the question mark to empty the box for a wrong answers.)
	Seasonal factors like winter or summer.unchecked Number of days present in a month.unchecked Systematic factors like guests, switching off fans and lights.unchecked Income taxes paid on hotel income.

Answer 1