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Integrative Exercise

Cost Behavior and Cost$-$Volume$-$Profit Analysis for Many Glacier Hotel

Using the High$-$Low Method to Estimate Variable and Fixed Costs

Located on Swiftcurrent Lake in Glacier National Park, Many Glacier Hotel was built in $1915$ by the Great Northern Railway. To supplement its lodging revenue, the hotel decided to begin manufacturing and selling small wooden canoes decorated with symbols hand painted by Native Americans living near the park. The canoes were a great success, so a couple of years later the hotel began manufacturing and selling paddles. Many hotel guests purchase a canoe and paddles for use in self$-$guided tours of Swiftcurrent Lake. Because production of the two products began in different years, the canoes and paddles are produced in separate production facilities and employ different laborers. Each canoe sells for $$540,$ and each paddle sells for $$60.$ About $15$ years ago, a fire destroyed the hotel's accounting records. A new system put into place before the next season provides the following aggregated data for the hotel's canoe and paddle manufacturing and marketing activities $($Years $1$ through $12$ give the data for the years in which the new accounting system was active$)$:

Manufacturing Data

Year Number of

Canoes

Manufactured Total Canoe

Manufacturing

Costs Year Number of

Paddles

Manufactured Total Paddle

Manufacturing

Costs

$1250$ $$103,0001900$ $$38,500$

$2240115,00021,20049,000$

$3275128,00031,00044,000$

$4310114,00041,10045,500$

$5350141,50051,40052,000$

$6380132,00061,70066,500$

$7415146,50071,72066,300$

$8430132,00081,85071,750$

$9450146,10091,90072,000$

$10470155,000102,02078,900$

$11480136,000112,05078,200$

$12500167,000122,20084,000$

Manufacturing Data

Year Number of

Canoes

Sold Total Canoe

Marketing

Costs Year Number of

Paddles

Sold Total Paddle

Marketing

Costs

$1250$ $$45,0001900$ $$7,500$

$224047,00021,2009,000$

$327543,00031,0008,000$

$431051,00041,1008,500$

$535062,00051,40010,000$

$638053,00061,70011,500$

$741568,50071,72011,600$

$843063,00081,85012,250$

$945065,00091,90012,500$

$1047067,000102,02013,100$

$1148052,000112,05013,250$

$1250073,000122,20014,000$

Required: