Exercise $6$A$-1($Algo$)$ High$-$Low Method $[$LO$6-10]$

The Cheyenne Hotel in Big Sky$,$ Montana, recorded its total electrical costs and number of occupancy$-$days over the last year. An occupancy$-$day represents a room rented 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:

Using the high$-$low method, estimate the fixed cost of electricity per month and the variable cost of electricity per occupancy$-$day.

Note: 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.

What other factors in addition to occupancy$-$days are likely to affect the variation in electrical costs from month to month?

Note: You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.

check all that apply

Systematic factors like guests, switching off fans and lights.

Number of days present in a month.

Income taxes paid on hotel income.

Seasonal factors like winter or summer.

Fixed salary paid to hotel receptionist.