Question 2 - Selecting a cost driver Iggy Hospital is a small animal hospital that specializes in minor surgeries. Timmy Snyder, Iggy's CEO, is concerned about the hospital's consumption of medical suppiles. Timmy asks Tommy Poon, Iggy's CFO, to better understand the behavior of this cost. Tommy believes that there are two potential cost drivers for the hospital's medical supplies costs - the total number of procedures performed and the number of patient-hours generated by Iggy, Tommy has collected the following data. Medical Supplies Cost Week 1 $10,600 Week 2 $23,000 Week 3 $8,400 Week 4 $23,800 Week 5 $19,300 Week 6 $18,000 Week 7 $21,000 Week 8 $25,000 Week 9 $13,500 Week 10 $16,500 Week 11 $9,200 Week 12 $22,200 Week 13 $7,800 Week 14 $12700 Number of Number of Procedures Patient-Hours 32 200 47 410 26 160 49 400 46 340 34 320 52 350 55 420 20 180 25 270 36 150 36 370 12 130 41 240 46 Week 5 $19,300 Week 6 $18,000 Week 7 $21,000 Week 8 $25,000 Week 9 $13,500 Week 10 $16,500 Week 11 $9,200 Week 12 $22,200 Week 13 $7,800 Week 14 $12,700 Week 15 $22,500 34 52 55 20 25 36 36 12 41 38 340 320 350 420 180 270 150 370 130 240 380 Required: (a) Prepare a scatterplot using the number of procedures performed. Use Excel to fit a straight line through the data points. Write down the cost equation and R-squared. (b) Prepare a scatterplot using the number of patient-hours. Use Excel to fit a straight line through the data points. Write down the cost equation and R-squared (c) Evaluate the regression models you obtained in (a) and (b). Determine whether number of procedures performed or number of patient- hours is a better cost driver for predicting medical supplies costs. Explain. (d) Timmy expects that the hospital will perform 45 procedures and generate 480 patient-hours In week 16. Using the cost driver you chose in (c), help Timmy estimate the medical supplies costs for week 16