To use the high-low method, we need to find the variable and fixed costs based on the high and low activity levels.
1. Variable cost per occupied room per day:
We'll use the high and low occupancy rates to find the variable cost per room per day.
High occupancy: 70% = 1400 rooms occupied
Low occupancy: 45% = 900 rooms occupied
Change in occupancy: 1400 - 900 = 500 rooms
Change in total cost: R792,000
Variable cost per room per day = Change in total cost / Change in rooms / 30 days
2. Total estimated fixed cost per month:
Fixed cost = Total cost - (Variable cost per room per day * Occupied rooms * 30 days)
3. Operating costs with 60% occupancy in May:
Occupied rooms = 60% of 2000 rooms = 1200 rooms
Total cost = Fixed cost + (Variable cost per room per day * Occupied rooms * 30 days)
Let's calculate these values.
1. Variable cost per occupied room per day:
Change in total cost = R792,000
Change in rooms = 1400 - 900 = 500 rooms
Variable cost per room per day = R792,000 / 500 / 30 = R52.80
2. Total estimated fixed cost per month:
Using the high occupancy level:
Fixed cost = R792,000 - (R52.80 * 1400 * 30) = R792,000 - R2,356,800 = -R1,564,800 (This seems incorrect, let me recalculate)
3. Operating costs with 60% occupancy in May:
Occupied rooms = 60% of 2000 rooms = 1200 rooms
Total cost = Fixed cost + (Variable cost per room per day * Occupied rooms * 30 days)
Total cost = R792,000 + (R52.80 * 1200 * 30)
Let me recheck the calculations for the fixed cost.