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
First graph (using excel or graph by hand) the hospital's overhead costs against the number of patient days, then graph (using excel or graph by hand) the hospitals overhead costs against nursing hours according to the information provided above in order to answer the question below.
Question: Do the data appear to be straight forward or is there any potential problems with the data? Please explain.
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