Weber Valley Regional Hospital has collected data on all of its activities for the past 16 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 aregression on the data, using hours of nursing care as the independent variable.
Predict cost for the cardiac nursing care for September 2011 if 1,400 hours of nursing care are forecast. Evaluate the regression equation. How comfortable are you with the predicted cost for September 2011?
3. Upon looking into the events that happened at the end of 2010, you find that the cardiology ward bought a cardiac-monitoring machine for the nursing station.
Administrators 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 total $10,000. Now, run two regression equations, one for the observations from 2010 and the second using only the observations for the eight months in 2011. Discuss your findings. What is your predicted cost of the cardiac nursing care activity for September 2011?LO1

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Y Cost X Hours of Nursing Care May 2010 $59,600 1,400 June 2010 57,150 1,350 July 2010 61,110 1,460 August 2010 65,800 1,600