Chapter 5 Example

# Chapter 5 Example - Variable and Fixed Costs...

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Luci runs a popular hotel on the beach and during the off-season, she often offers  discount prices to encourage people to come and stay (to help offset her fixed costs) but  in order to determine the lowest price possible, she MUST know the variable cost  associated w/ occupying a room; below are her electric costs and while there are other  variable costs, she needs to know how much electricity, on average, a guest uses when in  a room. Month                                                           Rooms Occupied                                                    Total Cost     January 50   rooms \$3,960 February 40   rooms \$3,520 March 90   rooms \$5,720 April 110 rooms \$ 6,600 Using the high-low method, please help her answer the following: 1: What is the average variable rate per room used?

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