Problem
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
|
12,000
|
|
April
|
7,500
|
11,700
|
|
May
|
10,000
|
13,200
|
|
June
|
11,500
|
14,100
|
|
July
|
13,500
|
15,300
|
|
August
|
12,500
|
14,700
|
|
September
|
10,000
|
13,200
|
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.
1. Using the high-low method, estimate a cost formula for custodial supplies expense.
2. Using the cost formula you derived above, what amount of custodial supplies expense would you expect to be incurred at an occupancy level of 11,500 guest-days?
3. Prepare a scattergraph using the data given above.