The Lakeshore Hotel’s guest-days of occupancy and custodial supplies expense ove

Question

The Lakeshore Hotel’s guest-days of occupancy and custodial supplies expense over the last seven months were:

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.

Using the high-low method, estimate a cost formula for custodial supplies expense. (Round the Variable cost per guest-day to 2 decimal points.)

       

Using the cost formula you derived above, what amount of custodial supplies expense would you expect to be incurred at an occupancy level of 12,800 guest-days? (Do not round your intermediate calculations.)

       

Prepare a scattergraph using the data given above. (Place custodial supplies expense on the vertical axis and guest-days on the horizontal axis. Round your plotting points to the nearest hundredth value.)

  
  

The Lakeshore Hotel’s guest-days of occupancy and custodial supplies expense over the last seven months were:

Explanation / Answer

3) Scatter diagram is not possible to upload, so sorry

1) high - low method: GD (x) CS exp High 13000 13200 Low 7000 10800 Difference 6000 2400 Per GD = 2400/6000 = 0.40 Fixed exp = 10800 - 7000*0.40 = 8000 Equation = CS exp = 0.40 x + 8000 2) CS exp. = 0.40 * 12800 + 8000 = 13120

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