Answer:
Occupancy days Electrical cost
High activity level 4,370 $11,605
Low activity level 680 $2,380
Change 3,690 $9,225
Variable cost $2.50 per occupancy days
Fixed cost $680
Explanation:
The computation of the fixed cost and the variable cost per hour by using high low method is shown below:
Variable cost per occupancy-day = (High electrical cost - low electrical cost) ÷ (High month occupancy days - low month occupancy days)
= ($11,605 - $2,380) ÷ (4,370 days - 680 days)
= $9,225 ÷ 3,690 days
= $2.50 per occupancy days
Now the fixed cost equal to
= High electrical cost - (High month occupancy days × Variable cost per occupancy days)
= $11,605- (4,370 days × $2.5)
= $11,605 - $10,925
= $680