Exercise 2-14 High-Low Method; Predicting Cost [LO2-4, LO2-5]

The Lakeshore Hotels guest-days of occupancy and custodial supplies expense over the last seven months Guest-Days Supplies Month March April May June July August September 6,000 5,500 8,000 9,500 11,500 10,500 8,000 5 10,800 S 10,500 S 12,000 S 12,900 S 14,100 S 13,500 S 12,000 Guest-days is a measure of the overall activity at the hotel. For example, a guest who stays at the hotel for three days is counted as three guest-days. Required: 1. Using the high-low method, estimate a cost formula for custodial supplies expense. (Round the Variable cost per guest-day to 2 decimal points.) Guest-Days Supplies High activity level Low activity level Change Variable cost per guest-day Fixed cost per month per guest-day