The Edelweiss Hotel in Vail

 1.  The following costs were incurred in September:
  Direct materials $ 43,000 
  Direct labor $ 29,000 
  Manufacturing overhead $ 20,000 
  Selling expenses $ 20,000 
  Administrative expenses $ 31,400 
Prime costs during the month totaled:

2. A partial listing of costs incurred during December at Gagnier Corporation appears below:
   
  Factory supplies $ 24,500  
  Administrative wages and salaries $ 343,000  
  Direct materials $ 490,000  
  Sales staff salaries $ 245,000  
  Factory depreciation $ 196,000  
  Corporate headquarters building rent $ 98,000  
  Indirect labor $ 98,000  
  Marketing $ 343,000  
  Direct labor $ 264,600  
 
The total of the period costs listed above for December is:

3. The  Edelweiss  Hotel  in  Vail,  Colorado,  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.

   
Month
Occupancy-
Days
Electrical
Costs
  January 3,290      $ 16,450    
  February 3,160      $ 15,800    
  March 1,800      $ 9,000    
  April 4,430      $ 18,500    
  May 970      $ 4,850    
  June 1,650      $ 8,250    
  July 4,150      $ 18,020    
  August 4,160      $ 18,070    
  September 2,050      $ 10,250    
  October 1,110      $ 5,550    
  November 780      $ 3,900    
  December  2,810      $ 14,050    
Required:
1. Using  the  high-low  method,  estimate  the  fixed  cost  of  electricity  per  month  and  the  variable  cost  of
electricity per occupancy-day.

2. What other factors other than occupancy-days are likely to affect the variation in electrical costs from
month to month?

4. Redhawk, Inc., is a merchandiser that provided the following information:
    
  Number of units sold   13,000 
  Selling price per unit $ 17 
  Variable selling expense per unit $ 2 
  Variable administrative expense per unit $ 1.5 
  Total fixed selling expense $ 20,000 
  Total fixed administrative expense $ 13,000 
  Merchandise inventory, beginning balance $ 8,000 
  Merchandise inventory, ending balance $ 23,000 
  Merchandise purchases $ 89,000