University Hospital has prepared a schedule of actual overhead costs for its blood test unit for the past year.

463 Problem 11.53 Methods of Cost Estimation:

Account Analysis

(LO 3,4)

Activities Overhead Costs

; Technician Total Indirect Building Equipment Equipment Data Technical Month Tests Hours Overhead Supplies Labor Occupancy Utilities Cost Maint. Processing Support 1 4,034 1,644 $ 55,093 $ 2,210 $ 15,631 $ 16,300 $ 2,332 $ 12,800 $ 1,910 $ 2,710 $ 1,200 4,532 1,884 56,451 2,970 15,650 16,300 2,498 12,800 2,190 2,843 1,200 3 5,267 2,090 65,797 2,637 Wey es 21,800 2,880 16,000 2,274 3,093 1,400 4 4,303 1,743 55,716 2,133 15,650 16,300 2,489 12,800 1,990 3,154 1,200 5 4,450 1,764 55,513 2,349 15,637 16,300 2,240 12,800 1,910 3,076 1,200 6 5,458 2,009 66,010 3,110 15,750 21,800 2,540 16,000 2,170 3,240 1,400 u 5,419 2,049 66,911 3,440 15,724 21,800 2,820 16,000 2,290 3,437 1,400 8 5,716 2,059 66,628 3,030 19;/59 21,800 2,740 16,000 2,310 3,593 1,400 9 4,570 1,918 59,955 2,420 15,689 16,300 2,220 12,800 2,050 3,275 1,200 10 4,984 1,940 66,072 3,195 15,700 21,800 2,539 16,000 2,276 3,161 1,400 11 4,431 1,796 55,644 2,790 15,667 16,300 2,140 12,800 1,806 2,942 1,200 We 4,737 1,805 56,939 3,140 15,669 16,300 2,650 12,800 1,980 3,000 1,400 Total 57,901 22,701 $722,728 $33,424 $188,236 $223,100 $30,088 — $169,600 $25, 156 $37,523 $15,600 In the past, the overhead costs have been related to the number of tests. Following management instructions, data were gathered on past costs and past test levels and technician hours.

Required Prepare a cost-estimation equation using the account analysis approach in which the only independent variable is the number of tests. (Hint: Make a scattergraph of each cost with tests as the X variable.)