Response to the following problem:
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 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 Cost
|
|
January
|
1,736
|
$4,127
|
|
February
|
1,904
|
$4,207
|
|
March
|
2,356
|
$5,083
|
|
April
|
960
|
$2,857
|
|
May
|
360
|
$1,871
|
|
June
|
744
|
$2,696
|
|
July
|
2,108
|
$4,670
|
|
August
|
2,406
|
$5,148
|
|
September
|
840
|
$2,691
|
|
October
|
124
|
$1,588
|
|
November
|
720
|
$2,454
|
|
December
|
1364
|
$3,529
|
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 tomonth?