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 . . . . . . . . .
|
2604
|
6257
|
|
February . . . . . . . .
|
2856
|
6550
|
|
March . . . . . . . . . . .
|
3534
|
7986
|
|
April . . . . . . . . . . .
|
1440
|
4022
|
|
May . . . . . . . . . . . .
|
540
|
2289
|
|
June . . . . . . . . . . .
|
1116
|
3591
|
|
July . . . . . . . . . . . . .
|
3162
|
7264
|
|
August . . . . . . . . .
|
3608
|
8111
|
|
September . . . . . .
|
1260
|
3707
|
|
October . . . . . . . . .
|
186
|
1712
|
|
November . . . . . . .
|
1080
|
3321
|
|
December . . . . . . .
|
2046
|
5196
|
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 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?