Caesar Entertainment Corporations Form 10k Contains A Variety Of Data

Caesar Entertainment Corporation’s Form 10-K contains a variety of data in addition to financial statements. Below is a list that contains Caesars’ food and beverage costs (adapted) taken from its Statements of Operations for the past 22 years. In addition, the number of hotel rooms and suites owned by Caesars at the end of each of those 22 years has been gathered from other information provided in the Form 10-Ks.

Requirements
1. Using the high-low method, find the following cost estimates:
a. Variable food and beverage cost per hotel room/suite
b. Fixed food and beverage cost per hotel room/suite
2. Perform a regression analysis using Excel. Use # of hotel rooms & suites as the X and the Food and beverage costs as the Y in your regression analysis.
a. What is the estimated variable food and beverage cost per hotel room/suite?
b. What is the estimated fixed food and beverage cost per hotel room/suite?
c. In your opinion, is the number of hotel rooms and suites a good predictor of Caesars’ food and beverage costs? Why or why not?
Compare the estimates of variable and fixed costs calculated using the high-low method to the estimates calculated using the regression method. Which method would most likely provide a better cost estimate? Explain.

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