Ashley Stenback is the Chief Operating Officer at Great Hospital in Forest Lake, Minnesota. He is analyzing the hospital's He has gathered the following information for the last six months of the most recent year: 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. (Click the icon to view the information.) Requirement 1. Are the hospital's overhead costs fixed, variable, or mixed? Explain. overhead cost per nursing hour and overhead cost per patient day with volume. 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 23,500 nursing hours are predicted for the month. 6. Stenback 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 23,500 nursing hours are predicted for the month, what is the total predicted hospital overhead? 7. Stenback then ran the regression analysis using number of patient days as the cost driver. The Excel output from the regression analysis follows. If 3,720 patient days are predicted for the month, what is the total predicted hospital overhead? 8. Which regression analysis (using nursing hours or using number of patient days as the cost driver) produces the best cost equation? Explain your answer. Data table Ashley Stenback is the Chief Operating Officer at Great Hospital in Forest Lake, Minnesota. He is analyzing the hospital's He has gathered the following information for the last six months of the most recent year: 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. (Click the icon to view the information.) Requirement 1. Are the hospital's overhead costs fixed, variable, or mixed? Explain. overhead cost per nursing hour and overhead cost per patient day with volume. 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 23,500 nursing hours are predicted for the month. 6. Stenback 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 23,500 nursing hours are predicted for the month, what is the total predicted hospital overhead? 7. Stenback then ran the regression analysis using number of patient days as the cost driver. The Excel output from the regression analysis follows. If 3,720 patient days are predicted for the month, what is the total predicted hospital overhead? 8. Which regression analysis (using nursing hours or using number of patient days as the cost driver) produces the best cost equation? Explain your answer. Data table
