The Cheyenne Hotel in Big Sky, Montana, has accumulated records of the total electrical costs of the
Question:
The Cheyenne Hotel in Big Sky, Montana, has accumulated records of the total electrical costs of the hotel and the number of occupancy-days over the last year. An occupancy-day represents a room rented out 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 | ||
January | 3,400 | $ | 10,234 | |
February | 3,280 | $ | 10,052 | |
March | 4,370 | $ | 11,605 |
|
April | 1,950 | $ | 6,825 |
|
May | 680 | $ | 2,380 |
|
June | 1,960 | $ | 6,860 | |
July | 4,040 | $ | 11,060 | |
August | 4,080 | $ | 11,100 | |
September | 2,240 | $ | 7,602 |
|
October | 1,030 | $ | 3,605 | |
November | 1,460 | $ | 4,634 | |
December | 2,700 | $ | 8,974 |
Using the high-low method, estimate the fixed cost of electricity per month and the variable cost of electricity per occupancy day. (Do not round your intermediate calculations. Round your Variable cost answer to 2 decimal places and Fixed cost element answer to a nearest whole dollar amount)
What other factors other than occupancy days are likely to affect the variation in electrical costs from month to month? (You may select more than one answer. Single-click the box with the question mark to produce a checkmark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.)
- Systematic factors like guests, switching off fans and lights.
- A number of days present in a month.
- Income taxes paid on hotel income.
- Seasonal factors like winter or summer.
Managerial Accounting
ISBN: 978-0697789938
13th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer