The Lakeshore Hotel's occupancy-days and custodial supplies expense over the last seven months were as follows:...

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The Lakeshore Hotels occupancy-days and custodial supplies expense over the last seven months were as follows: Month March A

business accounting

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Answer 1

Answer #1

Answer
1.
a. Variable cost per unit	= (Highest activity cost - Lowest activity cost)/(Highest activity - Lowest activity)
	= (23350 - 17250) / (29400-12740)
	= $ 0.37 per occupancy day

b. Fixed cost	= Total Cost - Variable Cost
	= 23350 - (29400 * 0.37)
	= $ 12472

Cost Formula for custodial supplies expense	*= Fixed + (Variable cost per occupancy Activity)**
	= 12472 + (0.37 * Activity)
2.
Amount of custodial supplies expense at occupancy level of 14200 occupancy days =

Variable cost (14200 x 0.37)	5254
Fixed cost	12472
Total cost	17726

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Answer 2

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