Betty Yeager has been operating a dental practice for the past five years. As part of her
Question:
Betty Yeager has been operating a dental practice for the past five years. As part of her practice, she provides a dental hygiene service. She has found that her costs for this service increase with patient load. Costs for this service over the past eight months are as follows:
Month | Patients Served | Total Cost |
May | 320 | $2,000 |
June | 480 | $2,500 |
July | 600 | $3,000 |
August | 200 | $1,900 |
September | 720 | $4,500 |
October | 560 | $2,900 |
November | 630 | $3,400 |
December | 300 | $2,200 |
Required:
1. Determine the cost estimation model using the high-low method.
2. Estimate the cost of dental hygiene services for January for 450 patients using the cost estimation model from (1).
3. Determine the cost estimation model using the method of least squares/regression analysis.
4. Estimate the cost of dental hygiene services for January for 450 patients using the cost estimation model/regression analysis from (3).
5. Determine the coefficient of determination/R2. What does this measure tell you about the cost estimation model from (3)?
Accounting Business Reporting for Decision Making
ISBN: 9780730302414
4th edition
Authors: Jacqueline Birt, Keryn Chalmers, Albie Brooks, Suzanne Byrne, Judy Oliver