Question

The lakeshore hotel's guest-days of occupancy and custodial supplies expense over the last seven months were: month guest-day of occupancy custodial supplies expense march 4,000 $ 7,500 april 6,500 $ 8,250 may 8,000 $ 10,500 june 10,500 $ 12,000 july 12,000 $ 13,500 august 9,000 $ 10,750 september 7,500 $ 9,750 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.

Answer 1

Answer:

cost formula: Total cost = F + (V x Q) = $4,500 + ($0.75 x Q)

• F = fixed costs = $4,500
• V = variable costs = $0.75 per guest day
• Q = number of guest days

Explanation:

month                      occupancy              supplies expenses

march                           4,000                         $7,500

april                              6,500                         $8,250

may                              8,000                        $10,500

june                             10,500                       $12,000

july                               12,000                       $13,500

august                           9,000                       $10,750

september                    7,500                         $9,750

high activity level        12,000                       $13,500

low activity level           4,000                        $7,500

variation                        8,000                        $6,000

variable cost per guest-day = $6,000 / 8,000 = $0.75

fixed costs per month = $13,500 - (12,000 x $0.75) = $4,500

cost formula: Total cost = F + (V x Q)

F = fixed costs = $4,500

V = variable costs = $0.75 per guest day

Q = number of guest days