1. Are the hospital's overhead costs fixed, variable, or mixed? Explain.
2. Graph the hospital's overhead costs against nursing hours.
3. Graph the hospital's overhead costs against the number of patient days.
4. Do the data appear to be sound or do you see any potential data problems? Explain.
5. Use the highlow method to determine the hospital's cost equation using nursing hours as the cost driver. Predict total overhead costs if 23,500 nursing hours are predicted for the month.
6. runs a regression analysis using nursing hours as the cost driver to predict total hospital overhead costs. The Excel output from the regression analysis is shown here
Ms. Johnson
(Click the icon to view the regression analysis.)
If 23,500 nursing hours are predicted for the month, what is the total predicted hospital overhead?
7. then ran the regression analysis using number of patient days as the cost driver. The Excel output from the
regression is shown here:
Ms. Johnson
(Click the icon to view the regression analysis.)
If 3,800 patient days are predicted for the month, what is the total predicted hospital overhead?
8. Which regression analysis (using nursing hours or using number of patient days as the cost driver) produces the best cost equation? Explain your answer.