Question
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
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 hospital's overhead. The latest information on the hospital is as follows:
Month Hospital overhead costs Nursing hours No. of patient days Overhead cost per nursing hr. Overhead cost per patient day
January $700,000 34,250 5,550 $20.43 $126.13
February $799,000 37,250 6,500 $21.44 $122.92
March $617,000 29,150 6,375 $21.17 $96.78
April $691,000 32,100 5,020 $21.53 $137.65
May $860,000 47,150 8,400 $18.23 $102.38
June $666,600 30,500 4,900 $21.86 $136.04
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: 264704.3
Slope: 13.04836
RSQ: 0.908223
Question: If 36,400 hours are predicted for the month, what is the total predicted hospital overhead?
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