Caesar Entertainment Corporation's Form 10-K contains a variety of data in addition to financial statements. Below is
1. Using the high-low method, find the following cost estimates:
a. Variable food and beverage cost per hotel room/suite
b. Fixed food and beverage cost per hotel room/suite
2. Perform a regression analysis using Excel. Use # of hotel rooms & suites as the X and the Food and beverage costs as the Y in your regression analysis.
a. What is the estimated variable food and beverage cost per hotel room/suite?
b. What is the estimated fixed food and beverage cost per hotel room/suite?
c. In your opinion, is the number of hotel rooms and suites a good predictor of Caesars' food and beverage costs? Why or why not?
Compare the estimates of variable and fixed costs calculated using the high-low method to the estimates calculated using the regression method. Which method would most likely provide a better cost estimate? Explain.
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