1. The administrator of Green Hills Hospital would like a cost formula linking the costs

involved in admitting patients to the number of patients admitted during a month.

The admitting departments costs and the number of patients admitted during the

immediately preceding eight months are given in the following table.

MONTH Number of Patients Admitted Admitting Department Costs

May 1,750 $14,700

June 1,875 $15,200

July 1,675 $13,700

August 1,600 $14,000

September 1,550 $14,300

October 1,300 $13,100

November 1,100 $12,800

December 1,500 $14,600

Required:

a) Use the high-low method to establish the fixed and variable components of

admitting costs.

b) Express the fixed and variable components of admitting costs as a cost

formula in the linear equation form Y = a + bX.