Ashley McKnight is the Chief Operating Officer at Top Hospital in Atlanta, Georgia. She is analyzing the hospital's overhead costs but is not sure whether nursing hours or the number of patient days would be the best cost driver to use for predicting the hospital's overhead. She has gathered the following information for the last six months of the most recent year: (Click the icon to view the information.) Read the requirements. 1. Are the hospital's overhead costs fixed, variable, or mixed? Explain. 2. Graph the hospital's overhead costs against nursing hours. 3. Graph the hospital's overhead costs against the number of patient days. 4. Do the data appear to be sound, or do you see any potential data problems? Explain. 5. Use the high-low method to determine the hospital's cost equation using nursing hours as the cost driver. Predict total overhead costs if 24,000 nursing hours are predicted for the month. 6. McKnight runs a regression analysis using nursing hours as the cost driver to predict total hospital overhead costs. The Excel output from the regression analysis follows. If 24,000 nursing hours are predicted for the month, what is the total predicted hospital overhead? A B C D E F G 1 SUMMARY OUTPUT - Nursing hours as cost driver 2 Regression Statistics 3 Multiple R 0.955681 4 R Square 0.913327 0010 A B C D E G 1 SUMMARY OUTPUT - Nursing hours as cost driver 2 Regression Statistics 3 Multiple R 0.955681 4 R Square 0.913327 5 Adjusted R Square 0.891659 6 Standard Error 19,749.14671 7 Observations 6 8 ANOVA Significance F 9 df SS MS F 10 Regression 1| 16,439,884,817 16,439,884,817| 42.150439 0.002903 11 Residual 4 1,560,115,183 390,028,796 12 Total 5 18,000,000,000 13 Coefficients Standard Error t Stat P-value Lower 95% Upper 95% 173,670.16 48,170.874 3.605 0.023 39,926.37 307,413.944 14 Intercept X Variable 151 13.12 2.021 6.492 0.000 7.509 18.731 7. McKnight then ran the regression analysis using number of patient days as the cost driver. The Excel output from the regression analysis follows. If 3,680 patient days are predicted for the month, what is the total predicted hospital overhead? A B D E F G 1 SUMMARY OUTPUT - Using number of patient days as cost driver N Regression Statistics 3 Multiple R 0.749327 4 R Square 0.56149 5 Adjusted R Square 0.451863 6 Standard Error 44,421.76043 7 Observations 6 8 ANOVA Significance F 9 df SS MS F 10 Regression 1 10,106,828,801 10,106,828,801 5.121809 0.08638 11 Residual 4 7,893,171,199 1,973,292,800 12 Total 5 18,000,000,000 13 Coefficients Standard Error t Stat P-value Lower 95% Upper 95% 14 Intercept 270,606.28 95,151.399 2.844 0.047 6,423.644 534,788.916 15 X Variable 1 51.37 22.699 2.263 0.086 -11.652 114.395 Which regression analysis (using nursing hours or using number of patient days as the cost driver) Requirement 1. Are the hospital's overhead costs fixed, variable, or mixed? Explain. The hospital's overhead costs appear to be a mixed cost. If it were a fixed cost, it would remain constant in total each month. If it were a variable cost, it would remain constant on a per unit (of activity) bas Both of the hospital's overhead cost per nursing hour and overhead cost per patient day vary with volume. (After you hit continue, the screen may take you below the beginning of the next step. If so, scroll back up to the top of the step.) Requirement 2. Graph the hospital's overhead costs against nursing hours. Plot the points on the graph. (Enlarge the graph and use the point tool button displayed below to draw the graph.) Relationship of Hospital Overhead Costs to Nursing Hours e Hospital Overhead Costs AANNNNNNOUUNTO AAALALA Requirement 3. Graph the hospital's overhead costs against the number of patient days. Plot the points on the graph. (Enlarge the graph and use the point tool button displayed below to draw the graph.) Relationship of Hospital Overhead Costs to Number of Patient Days Hospital Overhead Costs POLOLOLOLIDDLE THANH TO Ooooooo 3,000B0C02902905908601604600000 Number of Patient Days Requirement 4. Do the data appear to be sound, or do you see any potential data problems? Explain. outlier. There does not appear to be any outlier in the graph depicting overhead costs against nursing hours. In the graph of overhead costs against the number of patient days, there does appear to be an The September data point appears out of line with the other data points. If any of the data points are out of line, management should check into this data before continuing with the analysis. Requirement 5. Use the high-low method to determine the hospital's cost equation using nursing hours as the cost driver. Predict total overhead costs if 24,000 nursing hours are predicted for the month. Use the high-low method to determine the hospital's cost equation using nursing hours as the cost driver. (Round the variable cost to the nearest cent.) y = X + Ashley McKnight is the Chief Operating Officer at Top Hospital in Atlanta, Georgia. She is analyzing the hospital's overhead costs but is not sure whether nursing hours or the number of patient days would be the best cost driver to use for predicting the hospital's overhead. She has gathered the following information for the last six months of the most recent year: (Click the icon to view the information.) Read the requirements. 1. Are the hospital's overhead costs fixed, variable, or mixed? Explain. 2. Graph the hospital's overhead costs against nursing hours. 3. Graph the hospital's overhead costs against the number of patient days. 4. Do the data appear to be sound, or do you see any potential data problems? Explain. 5. Use the high-low method to determine the hospital's cost equation using nursing hours as the cost driver. Predict total overhead costs if 24,000 nursing hours are predicted for the month. 6. McKnight runs a regression analysis using nursing hours as the cost driver to predict total hospital overhead costs. The Excel output from the regression analysis follows. If 24,000 nursing hours are predicted for the month, what is the total predicted hospital overhead? A B C D E F G 1 SUMMARY OUTPUT - Nursing hours as cost driver 2 Regression Statistics 3 Multiple R 0.955681 4 R Square 0.913327 0010 A B C D E G 1 SUMMARY OUTPUT - Nursing hours as cost driver 2 Regression Statistics 3 Multiple R 0.955681 4 R Square 0.913327 5 Adjusted R Square 0.891659 6 Standard Error 19,749.14671 7 Observations 6 8 ANOVA Significance F 9 df SS MS F 10 Regression 1| 16,439,884,817 16,439,884,817| 42.150439 0.002903 11 Residual 4 1,560,115,183 390,028,796 12 Total 5 18,000,000,000 13 Coefficients Standard Error t Stat P-value Lower 95% Upper 95% 173,670.16 48,170.874 3.605 0.023 39,926.37 307,413.944 14 Intercept X Variable 151 13.12 2.021 6.492 0.000 7.509 18.731 7. McKnight then ran the regression analysis using number of patient days as the cost driver. The Excel output from the regression analysis follows. If 3,680 patient days are predicted for the month, what is the total predicted hospital overhead? A B D E F G 1 SUMMARY OUTPUT - Using number of patient days as cost driver N Regression Statistics 3 Multiple R 0.749327 4 R Square 0.56149 5 Adjusted R Square 0.451863 6 Standard Error 44,421.76043 7 Observations 6 8 ANOVA Significance F 9 df SS MS F 10 Regression 1 10,106,828,801 10,106,828,801 5.121809 0.08638 11 Residual 4 7,893,171,199 1,973,292,800 12 Total 5 18,000,000,000 13 Coefficients Standard Error t Stat P-value Lower 95% Upper 95% 14 Intercept 270,606.28 95,151.399 2.844 0.047 6,423.644 534,788.916 15 X Variable 1 51.37 22.699 2.263 0.086 -11.652 114.395 Which regression analysis (using nursing hours or using number of patient days as the cost driver) Requirement 1. Are the hospital's overhead costs fixed, variable, or mixed? Explain. The hospital's overhead costs appear to be a mixed cost. If it were a fixed cost, it would remain constant in total each month. If it were a variable cost, it would remain constant on a per unit (of activity) bas Both of the hospital's overhead cost per nursing hour and overhead cost per patient day vary with volume. (After you hit continue, the screen may take you below the beginning of the next step. If so, scroll back up to the top of the step.) Requirement 2. Graph the hospital's overhead costs against nursing hours. Plot the points on the graph. (Enlarge the graph and use the point tool button displayed below to draw the graph.) Relationship of Hospital Overhead Costs to Nursing Hours e Hospital Overhead Costs AANNNNNNOUUNTO AAALALA Requirement 3. Graph the hospital's overhead costs against the number of patient days. Plot the points on the graph. (Enlarge the graph and use the point tool button displayed below to draw the graph.) Relationship of Hospital Overhead Costs to Number of Patient Days Hospital Overhead Costs POLOLOLOLIDDLE THANH TO Ooooooo 3,000B0C02902905908601604600000 Number of Patient Days Requirement 4. Do the data appear to be sound, or do you see any potential data problems? Explain. outlier. There does not appear to be any outlier in the graph depicting overhead costs against nursing hours. In the graph of overhead costs against the number of patient days, there does appear to be an The September data point appears out of line with the other data points. If any of the data points are out of line, management should check into this data before continuing with the analysis. Requirement 5. Use the high-low method to determine the hospital's cost equation using nursing hours as the cost driver. Predict total overhead costs if 24,000 nursing hours are predicted for the month. Use the high-low method to determine the hospital's cost equation using nursing hours as the cost driver. (Round the variable cost to the nearest cent.) y = X +