Introduction To Managerial Accounting
8th Edition
ISBN: 9781259917066
Author: BREWER, Peter C., Garrison, Ray H., Noreen, Eric W.
Publisher: Mcgraw-hill Education,
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Chapter 6.A, Problem 1E
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 for one day. The hotels business is highly seasonal, with peaks occurringduring the ski season and in the summer.
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 in addition to occupancy-days are likely to affect the variation in electrical costs from month to month?
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Students have asked these similar questions
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 for onie day. The hotel's business is highly seasonal,
with peaks occunting during the ski season and in the summer.
Honth
January
February
March
Aoril
May
June
July
August
Septenber
October
Novenber
Decenber
Occupancy-Davs
4. 260
3.650
3. 160
2.150
2.260
1.450
3. 180
3.750
2.220
3.580
1,690
2.750
Electrical
Conts
$ 15.002
$ 14,112
$ 13.272
$9.000
$9.432
$6.00
S 19.356
$ 14.532
$9,324
$6.636
$7. 000
$ 11.580
Required:
1. Using the high-low method, estimate the fixed cost of electricity per month and the variable cost of electricity per occupancy day.
(Do not round your intermediate calculations. Round your Variable cost answer to 2 decimal places and Fixed cost element
answer to nearest whole dollar amount.)
es
Variable cost of electricity
Fixed cost of electricity
per occupancy day
per…
The Cheyenne Hotel in Big Sky, Montana, recorded its total electrical costs and number of occupancy-days over the last year. An
occupancy-day represents a room rented for one day. The hotel's business is highly seasonal, with peaks occurring during the ski
season and in the summer.
Month
January
February
March
April
May
June
July
August
September
October
November
December
Occupancy-Days
3,180
2,920
3,780
2,160
650
2,050
4,050
4,070
1,780
570
1,580
2,680
Electrical
Costs
$ 6,510
$ 6,261
Variable cost of electricity
Fixed cost of electricity
$ 7,392
$ 5,569
$ 1,820
$ 5,261
$ 7,829
$ 7,896
$ 4,984
$ 1,596
$ 4,424
$ 5,908
Required:
1. Using the high-low method, estimate the fixed cost of electricity per month and the variable cost of electricity per occupancy-day.
Note: Do not round your Intermediate calculations. Round your Variable cost answer to 2 decimal places and Fixed cost
element answer to nearest whole dollar amount.
per occupancy-day
per month
2. What other factors in addition to…
The Cheyenne Hotel in Big Sky, Montana, has accumulated records of the total electrical costs of the hoteland the number of occupancy-days over the last year. An occupancy-day represents a room rented out for oneday. The hotel’s business is highly seasonal, with peaks occurring during the ski season and in the summer.Month Occupancy-Days Electrical CostsJanuary ..................... 1,736 $4,127February .................... 1,904 $4,207March ........................ 2,356 $5,083April ........................... 960 $2,857May ........................... 360 $1,871June .......................... 744 $2,696July ............................ 2,108 $4,670August ....................... 2,406 $5,148September ................ 840 $2,691October ..................... 124 $1,588November ................. 720 $2,454December ................. 1,364 $3,529Required:1. Using the high-low method, estimate the fixed cost of electricity per month and the variable cost ofelectricity per occupancy-day.…
Chapter 6 Solutions
Introduction To Managerial Accounting
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