Problem:
Refer to the data in Exercise 5-10 for Beverly Hospital.
Required:
1. Prepare a scattergraph using the data from Exercise 5-10. Plot cost on the vertical axis and activity on the horizontal axis. Using a ruler, fi t a line to your plotted points.
2. Using the quick-and-dirty method, what is the approximate monthly fixed cost for X-rays? The approximate variable cost per X-ray taken?
3. Scrutinize the points on your graph, and explain why the high-low method would or would not yield an accurate cost formula in this situation.