Refer to the data for Lakeshore Hotel in Exercise 5—8.

Required:

1. Prepare a scattergraph using the data from Exercise 5—8. Plot cost on the vertical axis and activity on the horizontal axis. Using a ruler fit a straight line to your plotted points.

2. Using the quick-and-dirty method, what is the approximate monthly fixed cost? The approximate variable cost per guest-day?

3. Scrutinize the points on your graph and explain why the high-low method would or would not yield an accurate cost formula in this situation.

Guest-Days of Occupancy Custodial Supplies Expense Month March... April ... May... 4,000 $7,500 6,500 $8,250 8,000 10,500 $10,500 June . $12,000 July.... August. ... September .... 12,000 9,000 7,500 $13,500 $10,750 $9,750