1. Using the high-low method, calculate the variable rate per hour and the fixed cost for the nursing care activity. Comment on your results.

(5 marks) 20

2. Upon looking into the events that happened at the end of 2005, you find that the cardiology ward bought a cardiac-monitoring machine for the nursing station. A decision was also made to ass a new supervisory position for the evening shift. Monthly depreciation on the monitor and the salary of the new supervisor total $10,000. In addition, the rest of the nursing staff received a raise, and the cost of supplies has increased. Run the following regressions:

a. Create a dummy variable called "changes" that takes the value 0 for observations in 2005 and the value 1 for observations in 2006. Run a multiple regression on these data. [Attach the regression output]

(5 marks)

b. Run a regression on the 2005 data, using nursing hours as the single independent variable.[Attach the regression output]

(5 marks)

c. Run a regression on the 2006 data, using nursing hours as the single independent variable.[Attach the regression output]