A A hospital is analyzing its overhead costs It is not clear whether the number of patient days or nursing hours would be the best cost driver to use in predicting the hospitals overhead The latest information on the hospital is as follows Month Hospital Nursing No of Overhead Overhead Cost Overhead Hours Patient Cost Per Per Patient Costs Days Nursing Hr Day July $965,000 51,000 8,000 $18 92 $120 63 August $1,000,000 53,000 9,000 $18 86 $111 11 September $830,000 38,000 8,750 $21 84 $ 94 86 October $925,000 43,000 7,000 $21 51 $132 14 November $1,100,000 65,000 12,000 $16 92 $ 91 67 December $900,000 42,000 7,900 $21 42 $113 92 Required Graph the hospitals overhead costs against the number of patient days Note This is for your benefit so that you can answer Question 3 you do not need to submit this graph as part of the assignment Graph the hospitals overhead costs against nursing hours Note This is for your benefit so that you can answer Question 3 you do not need to submit this graph as part of the assignment Based on the graphs that you drew, do the data appear to be straight forward or do you see any potential problems with the data (i e, do the data points form straight lines) Please explain Using the high low method, determine the hospitals variable cost per nursing hour, rounded to two decimal places Now that you have calculated both the variable and fixed portions hospital overhead costs, write out the equation for hospital overhead costs using the high low method Using the cost equation that you just wrote, predict hospital overhead costs if 54,000 nursing hours are expended in a month The hospital ran a regression analysis using nursing hours as the cost driver to predict total hospital overhead costs The regression analysis produced the following data Intercept 346245 Slope 12 81796 RSQ 0 909311 Round the variable portion of the regression equation formula to two decimal places Based on the regression equation formula, what will the predicted total hospital overhead costs be if 54,000 nursing hours are expended during a month The hospital then ran a regression analysis using number of patient days as cost driver The regression analysis produced the following data Intercept 559764 Slope 47 970926 RSQ 0 563496482 Again, round the variable portion of the regression equation to two decimal places If 9,500 patient days are predicted for a month, what is the total predicted hospital overhead costs using the regression equation Which regression equation, the one using nursing hours as the cost driver or the one using patient days as the cost driver, produces the most accurate correlation (best explanation of) the predicted hospital overhead costs How do you know that your answer is correct In other words, justify your answer

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A. A hospital is analyzing its overhead costs. It is not clear whether the number of patient days or nursing hours would be the best

A hospital is analyzing its overhead costs. It is not clear whether the number of patient days or nursing hours would be the best cost driver to use in predicting the hospitals overhead. The latest information on the hospital is as follows:

Month Hospital Nursing No. of Overhead Overhead Cost

Overhead Hours Patient Cost Per Per Patient

Costs Days Nursing Hr. Day

July $965,000 51,000 8,000 $18.92 $120.63

August $1,000,000 53,000 9,000 $18.86 $111.11

September $830,000 38,000 8,750 $21.84 $ 94.86

October $925,000 43,000 7,000 $21.51 $132.14

November $1,100,000 65,000 12,000 $16.92 $ 91.67

December $900,000 42,000 7,900 $21.42 $113.92

Required:

Graph the hospitals overhead costs against the number of patient days. Note: This is for your benefit so that you can answer Question 3; you do not need to submit this graph as part of the assignment.

Graph the hospitals overhead costs against nursing hours. Note: This is for your benefit so that you can answer Question 3; you do not need to submit this graph as part of the assignment.

Based on the graphs that you drew, do the data appear to be straight forward or do you see any potential problems with the data (i.e, do the data points form straight lines)? Please explain.

Using the high-low method, determine the hospitals variable cost per nursing hour, rounded to two decimal places.

Now that you have calculated both the variable and fixed portions hospital overhead costs, write out the equation for hospital overhead costs using the high-low method.

Using the cost equation that you just wrote, predict hospital overhead costs if 54,000 nursing hours are expended in a month.

The hospital ran a regression analysis using nursing hours as the cost driver to predict total hospital overhead costs. The regression analysis produced the following data:

Intercept	346245
Slope	12.81796
RSQ	0.909311

Round the variable portion of the regression equation formula to two decimal places. Based on the regression equation formula, what will the predicted total hospital overhead costs be if 54,000 nursing hours are expended during a month?

The hospital then ran a regression analysis using number of patient days as cost driver. The regression analysis produced the following data:

Intercept	559764
Slope	47.970926
RSQ	0.563496482

Again, round the variable portion of the regression equation to two decimal places. If 9,500 patient days are predicted for a month, what is the total predicted hospital overhead costs using the regression equation?

Which regression equation, the one using nursing hours as the cost driver or the one using patient days as the cost driver, produces the most accurate correlation (best explanation of) the predicted hospital overhead costs. How do you know that your answer is correct? In other words, justify your answer.