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 |
| Jan |
2604 |
$6,257.00 |
| Feb |
2856 |
$6,550.00 |
| Mar |
3534 |
$7,986.00 |
| Apr |
1440 |
$4,022.00 |
| May |
540 |
$2,289.00 |
| Jun |
1116 |
$3,591.00 |
| Jul |
3162 |
$7,264.00 |
| Aug |
3608 |
$8,111.00 |
| Sep |
1260 |
$3,707.00 |
| Oct |
186 |
$1,712.00 |
| Nov |
1080 |
$3,321.00 |
| Dec |
2046 |
$5,196.00 |
Required:
1) Using the high / lo method, estimate the fixed cost of electricity per month and the variable cost of electricty 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?