Q1. Use the high-low method to estimate the cost behavior for the clinics administrative costs. Express the cost behavior in formula form (Y = a + bX). (Round your final answers to the nearest whole dollar.)

Q2. What is the variable cost per patient?

Q3.Which of the following points should be in included in a memo to the hospital administrator regarding these estimates?

- The high R2 value suggests that the regression analysis is invalid.

- The high-low method should be chosen over the regression analysis.

- The regression should be redone using just the data within the relevant range of activity.

- The wide fluctuations in activity for the year heavily influenced both the regression and high-low analysis.

"I don't understand this cost report at all," exclaimed Jeff Mahoney, the newly appointed administrator of Mountainview General Hospital. Our administrative costs in the new pediatrics clinic are all over the map. One month the report shows $8,300, and the next month it's $16,100. What's going on?" Mahoney's question was posed to Megan McDonough, the hospital's director of Cost Management. The main problem is that the clinic has experienced some widely varying patient loads in its first year of operation. There seems to be some confusion in the public's mind about what services we offer in the clinic. When do they come to the clinic? When do they go to the emergency room? That sort of thing. As the patient load has varied, we've frequently changed our clinic administrative staffing." Mahoney continued to puzzle over the report. Could you pull some data together, Megan, so we can see how this cost behaves over a range of patient loads?" "You'll have it this afternoon, McDonough responded. Later that morning, she gathered the following data: Month January February March April May June July August September October November December Patient Load 1,400 500 400 1,000 1,300 900 1,100 300 700 1,200 600 1,500 Administrative Cost $13,900 7,000 6,000 10,000 11,900 9,200 10,200 4,100 9,400 11,100 8,300 16,100 McDonough does not believe the first year's widely fluctuating patient load will be experienced again in the future. She has estimated that the clinic's relevant range of monthly activity in the future will be 600 to 1,200 patients. Required: 1-a. Use the high-low method to estimate the cost behavior for the clinic's administrative costs. Express the cost behavior in formula form (Y= a + bx). 1-b. Text 3. Which of the following points should be in included in a memo to the hospital administrator regarding these estimates