Response to the following problem:
High-Low Method
The Edelweiss Hotel in Vail, Colorado, 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 Costs
January 2,630 $ 10,783
February 3,130 $ 12,833
March 3,640 $ 13,583
April 1,090 $ 4,469
May 1,770 $ 7,257
June 1,730 $ 7,093
July 4,440 $ 14,854
August 3,860 $ 13,815
September 2,170 $ 8,897
October 1,210 $ 4,961
November 1,790 $ 7,339
December 2,930 $ 12,013
Required:
1. Using the high-low method, estimate the fixed cost of electricity per month and the variable cost of electricity per occupancy-day. (Round the "Variable cost per occupancy-day" to 2 decimal places and the "Fixed cost" to the nearest dollar amount.)