Weber Valley Regional Hospital has collected data on all of its activities for the past sixteen months. Data for cardiac nursing care follow:

Required:
1. Using the high-low method, calculate the variable rate per hour and the fixed cost for the nursing care activity.
2. Run regression on the data, using hours of nursing care as the independent variable.
Predict cost for the cardiac nursing care for September 2001 if 1,400 hours of nursing care are forecast. Evaluate the regression equation. How comfortable are you with the predicted cost for September 2001?
3. Upon looking into the events that happened at the end of 2000, you find that the car¬
diology ward bought a cardiac-monitoring machine for the nursing station. Adminis¬
trators also decided to add a new supervisory position for the evening shift. Monthly depreciation on the monitor and the salary of the new supervisor together totals $10,000.
Now, run two regression equations, one for the observations from 2000 and the second using only the observations for the eight months in 2001. Discuss your findings. What is your predicted cost of the cardiac nursing care activity for September 2001?

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Y' Cost X Hours of Nursing Care May 2000 June 2000 $59,600 1,400 57,150 1,350 July 2000 61,110 1,460 August 2000 65,800 1,600 September 2000 69,500 1,700