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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 | 3,180 | $6,510 |
| February | 2,920 | $6,261 |
| March | 3,780 | $7,392 |
| April | 2,160 | $5,569 |
| May | 650 | $1,820 |
| June | 2,050 | $5,261 |
| July | 4,050 | $7,829 |
| August | 4,070 | $7,896 |
| September | 1,780 | $4,984 |
| October | 570 | $1,596 |
| November | 1,580 | $4,424 |
| December | 2,680 | $5,908 |
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| Required: | |
| 1. |
Using the high low method, estimate the fixed cost of electricity per month and the variable cost of electricity per occupancy day. (Round the “Variable cost per occupancy day” to 2 decimal places and the “Fixed cost” to the nearest dollar amount. Omit the “$” sign in your response.) |
| Fixed cost | $ | per month |
| Variable cost | $ | per occupancy day |
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| 2. |
What other factors other than occupancy days are likely to affect the variation in electrical costs from month to month? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.) |
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