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

January $935,000 46,000 7,500 $20.33 $124.67

February $1,067,000 50,000 8,800 $21.34 $121.25

March $823,500 39,000 8,600 $21.10 $95.76

April $920,500 43,000 6,800 $21.41 $135.37

May $1,148,000 63,000 11,300 $18.22 $101.59

June $889,500 41,000 6,700 $21.70 $132.76

A. The hospital ran a regression analysis using nursing hours as the cost driver to predict total hospital overhead costs. Round variable cost per nursing hour to two decimal places. The regression analysis produced the following data:

Intercept	345411.4
Slope	13.15969
RSQ	0.912608

If 47,000 hours are predicted for the month, what is the total predicted hospital overhead?

B. The hospital then ran a regression analysis using number of patient days as cost driver. Round variable cost per patient day to two decimal places. The regression analysis produced the following data:

Intercept	533184.2669
Slope	51.9998873
RSQ	0.551637364

If 7,300 patient days are predicted for the month, what is the total predicted hospital overhead?

C. Which regression analysis (using nursing hours or patient days as the cost driver) produces the best cost equation? Why is the method you selected the best predictor? Justify your answer.