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PROBLroupA alyze cost behavior at a hospital using various cost e Objectives 1, 2, 3, 4, & 5) on is the Chief Operating Officer at
PROBLroupA alyze cost behavior at a hospital using various cost e Objectives 1, 2, 3, 4, & 5) on is the Chief Operating Officer at Mercy Hospital in Atlanta, Georg ia. She s analyzing the hospital's overhead costs but is not sure whether nursing hours or the omber of patient days would be the best cost driver to use for predicting the hospital's recent year: overhead. She has gathered the following information for the last six months of the most Overhead Nursing of Patient Cost per Cost per Costs Hours Days Nursing Hour Patient Day .$483,000 24,500 3,790 August..$535,000 28,500 4,310 September..$411,000 19,5004,230 October .$451,000 November ...$576,000 32,000 5,710 December .$446,000 20,000 3,290 $19.71 $18.77 $21.08 $22.00 $18.00 $22.30 $127.44 $ 124.13 S 97.16 $ 130.72 $ 100.88 20,500 3,450 $135.56 Requirements 1. Are the hospital's overhead costs fixed, variable, or mixed? Explain 2. Graph the hospital's overhead costs against nursing hours. Use Excel or graph by hand. Graph the hospital's overhead costs against the number of patient days. Use Excel or graph by hand. 3. 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 25,500 nursing hours are pre- dicted for the month
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