Managerial accounting 3 100 points Exercise 214 HighLow Meth

3. 1.00 points Exercise 2-14 High-Low Method: Predicting Cost [Lo2-4, Lo2-5] The Lakeshore Hotel\' months were s guest-days of occupancy and custodial supplies expense over the last seven Custodial Guest-Day of Supplies Expense Month March April May June July August September Occupancy ,000 7,500 6,500 S 8,250 8,000 10,500 10,500 12,000 2,000 13,500 9,000 10,750 7,500 $ 9,750 Guest-trys 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 Required: 1 Using the high-low method, estimate a cost formula for custodial supplies expense (Round the Variable cost per guest-day to 2 decimal points.) Custodial Guest-Days Supplies Expense High activity level Low activity level Change Variable cost per guest-day Fixed cost per month per guest-day O Type here to search ????????????/????17????????????????????????? ????????????????????????????????????????N \' /1/1/1/1/1/1/1/ 1/1/1/1/1/1/1 N IVVANYYVAVVMYAAAAACCOOOOO

Solution

1.

Variable cost = $6000 / 8000 = 0.75

Fixed cost = 13500 - 12000 * .75 = 4500

2.

	Guest-Days	CustodialSuppliesExpense
High activity level	12000	13500
Low activity level	4000	7500
Change	8000	6000
Variable cost per guest-day	$ 0.75	per guest-day
Fixed cost per month	4500