Question - High-Low Method; Predicting Cost
The Lakeshore Hotel's guest-days of occupancy and custodial supplies expense over the last seven months were:
|
Month
|
Guest-Days of Occupancy
|
Custodial Supplies Expense
|
|
March
|
8,000
|
$12,800
|
|
April
|
7,500
|
$12,400
|
|
May
|
10,000
|
$14,400
|
|
June
|
11,500
|
$15,600
|
|
July
|
13,500
|
$17,200
|
|
August
|
12,500
|
$16,400
|
|
September
|
10,000
|
$14,400
|
Guest-days is a measure of the overall activity at the hotel. For example, a guest who stays at the hotel for three days is counted as three guest-days.
Required: Using the high-low method, estimate a cost formula for custodial supplies expense.