FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Question
The Lakeshore Hotel guest days of occupancy and custodial supplies expense over the last seven months were:
Month Guest Days of Occupancy Custodial Supplies Expense
March 4,000 $7,500
April 6,500 $8,250
May 8,000 $10,500
June 12,000 $13,500
July 9,000 $10,750
August 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.
Required:
- Use the High-Low method, estimate a cost formula for custodial supplies expense
- Using the cost formula you derived above, what amount of custodial supplies expense would you expect to be incurred at an occupancy level of 11,000 guest days?
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