You are an accountant for a hotel chain and your boss has asked you to estimate the cost function for one of the firm’s economy lodging properties. Hotels in this segment have only one output: the provision of hotel rooms for overnight stays. The 110-room hotel you will examine is a 2-level wood building with exterior room access, located in Joplin, Missouri. On Canvas, download “Data.xlsx”, a file containing nine years of monthly data for the years 2012-2020. Table 1 lists the variable names and a brief description of each variable. Since these data has been collected over many years, monetary amounts must be adjusted since $1 spent today buys less than $1 spent in 2012. The U.S. Bureau of Labor Statistics estimates consumer prices monthly and Table 2contains their average annual consumer price index (CPI).It is possible to complete this project using Excel or, preferably, a statistical software package (e.g., R).1Required1.What is the cost object?2.What is the cost driver? 4.Plot the relationship between total expenses and rooms rented. Do costs behave as you expect? Are there unusual observations? Using the visual fit, or scatter graph method, what is your estimate of the monthly cost equation?5.Using the high-low method, estimate the hotel’s cost function. What is the monthly cost equation?36.Using regression analysis, estimate the hotel’s cost function (i.e., regress Total Coston to Rentals). What is the monthly cost equation? Assess your model in terms of economic plausibility and goodness of fit.

year	month	electric	gas	water	totalCost	rentals	hdd	cdd
2012	1	5725	1017	3758	62279	2445	546	3
2012	2	3269	897	1576	49923	2341	424	7
2012	3	4973	1582	1674	59918	2738	254	13
2012	4	1242	989	1618	51098	2395	46	144
2012	5	2877	813	1069	55843	2780	0	435
2012	6	4129	1014	2423	42756	2619	0	472
2012	7	4385	893	2532	54952	2923	0	530
2012	8	3216	835	2011	52570	2783	0	587
2012	9	2742	666	1755	47282	2151	0	333
2012	10	2312	699	1873	47798	2314	20	165
2012	11	2272	1019	1609	50030	2046	178	97
2012	12	1888	776	1634	32506	1971	420	7
2013	1	3389	1159	1870	49833	2036	406	19
2013	2	2939	923	1678	45903	2603	445	0
2013	3	3729	1180	1921	58680	2636	74	70
2013	4	1482	1204	1763	49301	2112	54	106
2013	5	3005	597	1536	53361	2573	2	325
2013	6	4376	1148	1993	55270	2452	0	450
2013	7	3743	1153	2125	49896	2739	0	526
2013	8	4890	1145	1997	58947	2749	0	531
2013	9	3505	954	2108	48218	2607	0	409
2013	10	3553	879	2080	52882	2622	4	320
2013	11	4023	1574	0	47757	2407	188	14
2013	12	7774	1371	2099	60151	2520	460	4
2014	1	1403	1627	6385	54455	2485	365	39
2014	2	3634	512	3004	53920	2508	271	8
2014	3	2499	1663	2120	55174	2996	202	28
2014	4	2069	1396	1845	60371	2700	45	104
2014	5	3617	991	2192	64136	2529	9	313
2014	6	4153	980	2244	62607	2843	0	541
2014	7	5282	1250	2304	56413	3070	0	614
2014	8	3941	826	2128	56669	2714	0	622
2014	9	4142	1433	2432	54023	2655	0	582
2014	10	4380	1638	2503	58428	2969	57	208
2014	11	2825	1724	2551	46826	2608	172	117
2014	12	3633	981	2736	53077	2417	457	5
2015	1	3036	1334	2231	54660	2632	283	2
2015	2	2893	1236	2300	50786	2661	343	13
2015	3	5412	1418	2830	72850	2854	111	107
2015	4	2475	941	2254	51049	2863	3	290
2015	5	5585	1115	2170	70094	3171	0	369
2015	6	5209	904	2409	67366	2991	0	495
2015	7	5323	858	2496	63023	2976	0	609
2015	8	5568	795	2302	55533	2673	0	679
2015	9	4505	665	2259	46260	2551	0	417
2015	10	4626	751	2032	53355	2376	38	220
2015	11	4739	1082	1920	46169	2597	182	63
2015	12	3992	1130	2179	47696	2427	408	15
2016	1	2428	1269	1919	61257	2487	596	2
2016	2	5291	1706	1935	61492	2433	380	5
2016	3	7938	1706	4835	80011	3015	149	84
2016	4	3902	1338	76	60351	2788	122	60
2016	5	3485	1248	2099	71895	2782	0	286
2016	6	4518	1012	2333	86843	2330	0	443
2016	7	4099	853	2660	88829	2526	0	458
2016	8	4825	885	3008	81291	2834	0	567
2016	9	4187	858	3157	64100	2692	0	417
2016	10	4590	953	3691	83303	2710	55	220
2016	11	2561	1293	3839	62889	2341	205	61
2017	1	3013	758	2119	81501	2210	545	11
2017	2	3309	1132	2203	70831	1928	287	19
2017	3	4324	1261	3036	85960	2978	190	61
2017	4	2555	1654	1821	79172	2853	76	134
2017	5	4207	1530	2256	78144	2980	0	374
2017	6	6154	1975	2529	71573	3041	0	619
2017	7	5118	2007	2327	80843	3169	0	586
2017	8	5778	867	2633	96057	3076	0	610
2017	9	3993	1093	2547	62836	2733	0	390
2017	10	4399	1421	3476	68859	2666	40	149
2017	11	2912	844	2317	77587	2578	195	50
2017	12	5037	1206	4560	77763	2119	430	18
2018	1	1773	1205	2074	61611	2129	458	17
2018	2	3634	981	3902	65862	2207	208	42
2018	3	3331	1152	2775	79746	2596	173	98
2018	4	3260	563	2532	56056	2269	56	143
2018	5	3253	577	3929	74362	2424	0	371
2018	6	5368	551	3665	74954	2373	0	591
2018	7	4954	582	3905	76560	2458	0	712
2018	8	5123	448	4121	72029	1993	0	686
2018	9	4087	461	4133	71412	2163	3	380
2018	10	3544	678	3096	60139	2345	69	162
2018	11	2634	758	2240	65817	2113	182	10
2018	12	5088	771	2715	54543	1964	573	2
2019	1	6418	1103	2009	63131	2105	568	1
2019	2	3929	1241	2760	61767	2285	526	0
2019	3	4014	813	3241	58452	2826	259	3
2019	4	2882	838	1671	56497	2191	32	109
2019	5	4222	683	2470	54284	2485	0	400
2019	6	4546	934	2878	61048	2480	0	558
2019	7	4616	748	2528	61558	2630	0	597
2019	8	6107	687	2470	67285	2778	0	684
2019	9	4143	617	1773	64625	2640	0	458
2019	10	3873	582	2088	63124	2835	38	131
2019	11	3235	709	2401	64943	2638	224	75
2019	12	3004	918	1794	47555	2485	418	3
2020	1	4319	1064	1978	67229	2482	554	1
2020	2	5934	918	1594	58403	2646	383	57
2020	3	2606	930	2425	61492	3042	136	118
2020	4	3202	715	2070	61030	2537	21	292
2020	5	3682	724	1936	65093	2538	21	376
2020	6	5349	730	3011	71457	2730	0	617
2020	7	5496	633	2869	67379	2786	0	661
2020	8	6123	630	3157	69181	2719	0	730
2020	9	5208	558	2403	76737	2862	0	465
2020	10	3991	724	2525	62214	2798	53	164
2020	11	3203	85	2235	66623	2406	215	91
2020	12	3170	1651	2449	62336	2407	418	6

Answer rating: 100% (QA)

Question 1 The cost object is the hotel room Question 2 The cost driver is the number of rooms rent... View the full answer