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:

MonthHospitalNursingNo. ofOverheadOverhead Cost

OverheadHoursPatientCost PerPer Patient

CostsDaysNursing Hr.Day

July$950,00050,0007,900$19.00$120.25

August$1,070,00052,0008,900$20.58$120.22

September$825,00040,0008,700$20.63$94.83

October$922,50043,5006,900$21.21$133.70

November$1,150,00064,00011,900$17.97$96.64

December$890,00041,5006,750$21.45$131.85

Graph the hospital's overhead costs against the number of patient days.

Graph the hospital's overhead costs against nursing hours.

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 hospital's 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 49,000 nursing hours are expended in a month.