Leight is the Chief Operating for at Top Hospital in Forest Lake Mitta. He is analyzing the hospitals overhead costs but is not sure whether nursing hours of the number of parents would be the best cost dlver to use for predicting the hospitals overhead He has gathered the following information for the last six months of the most recent year Click the icon to view the information Read the Requirement. Are the hospitals overhead costs fred, var med? Explain The hospital's overhead costs appear to be a cost cost would remain constant in total och montera variable cost would remain content on a per un for activity basis of the hospital overhead cont per hour and overhead cont per patient day Lake, Minnesota. He is analyzing the hospital's or the number of patient days would be the best cost driver to use He has gathered the following information for the last six monti (Click the icon to view the information.) Read the requirements. d, variable, or mixed ? Explain Data Table patie Hospital Overhead Costs Nursing Hours Month 479,000 . Number of Overhead Cost Overhead Cost Patient Days per Nursing Hour per Patient Day 3,640 $ 20.83 $ 131.59 4,300 $ 20.71 $ 122.79 4,260 $ 20.29 $ 97.65 3,490 $ 20.59 $ 129.80 July August September October 528,000 23,000 25,500 20,500 22.000 416,000 November ... $ 453,000 559,000 435,000 30,500 5,730 $ 18.33 $ 97.56 December 21,000 3,280 $ 20.71 $ 132.62 Print Done Answer. 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. Gable runs a regression analysis using nursing hours as the cost driver to predict total hospital overhead costs. The Excel output from the regression analysis is as follows: Click the icon to view the regression analysis.) If 24,000 nursing hours are predicted for the month, what is the total predicted hospital overhead? 7. Gable then ran the regression analysis using number of patient days as the cost driver. The Excel output from the regression is shown here: (Click the icon to view the regression analysis.) 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. Print Done Regression analysis using nursing hours SUMMARY OUTPUT - Nursing hours as cost driver Regression Statistics Multiple R 0.958335 R Square 0.918405 Adjusted R Square 0.898007 Standard Error 17,712.08289 Observations 6 ANOVA SS MS F Significance F 0.002568 14,124,461,812 Regression 14,124.461,812 45.022814 Residual 1,254,871,522 313,717,880 6 Total 15,379,333,334 Standard Lower Upper Coefficients Error 1 Stat P-value 95% 95% Intercept 141,867.97 50,663.259 2.8 0.049 1,204.213 282,531.726 14.17 2.111 X Variable 1 6.71 0.000 8.305 20.029 Print Done of the Regression analysis using number of patient days na per SUMMARY OUTPUT - Using number of patient days as cost driver Regression Statistics Multiple R 0.736429 R Square 0.542327 Adjusted R Square 0.427909 Standard Error 41,948.4953 Observations 6 ANOVA df SS MS F Significance F Regression 1 8,340,628,301 8,340,628,301 4.739865 0.09505 Residual 4 7,038,705,032 1,759,676,258 Total 5 15,379,333,333 Standard Lower Upper 95% Coefficients Error Stat P-value 95% 289.807.47 3.283 0.03 44,727.331 534,887.615 Intercept X Variable 1 88,271.2 21.035 45.8 2.177 0.095 -12.607 104.198 Print Done Ar GARAN
