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Boston College Operations And Supply Chain Management Assignment Help - The Cheyenne Hotel


Question - 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.

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. W hat other factors other than occupancy-days are likely to affect the variation in electrical costs
from month tomonth?

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