The controller feels confident that the cost of operating the scanner is a mixed cost. Required:

a. Prepare two scatter charts to determine which activity-number of patients or number of hours used-is the appropriate cost driver for the variable element of the total cost.

b. Using the appropriate scatter chart prepared in part

(a) visually estimate the straight-line that represents total cost. Draw this line and estimate the fixed cost and variable rate. (Round the variable rate to the nearest cent.)

c. Using the base determined in part (a), use the high-low points method to calculate the variable rate and the fixed cost per quarter.

d. The controller estimates that 1,600 patients will use the scanner in the current year. This will require 1,400 hours of scan time. Calculate expected total cost for the current year. Least Squares Method (Appendix). Refer to Problem 2-34. Required:

a. Use the least squares method to determine fixed and variable elements of total cost. Use only the more appropriate activity for these calculations. (Round the variable rate to the nearest cent.)

b. The controller estimates that 1,600 patients will use the scanner in the current year. This will require 1,400 hours of scan time. Calculate expected total cost for the current year.