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.

1. Using the high-low method, estimate the fixed cost of electricity per month and the variable cost of electricity per occupancy-day. Round off the fixed cost to the nearest whole dollar and the variable cost to the nearest whole cent.

2. What other factors other than occupancy-days are likely to affect the variation in electrical costs from month to month?

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Month Occupancy-Days Electrical Costs $4,127 January 1,736 $4,207 February 1,904 $5,083 March 2,356 April $2,857 960 May $1,871 360 June $2,696 744 2,108 $4,670 July $5,148 August 2,406 $2,691 September 840 $1,588 October 124 November 720 $2,454 $3,529 December 1364