Question Help Jaden Donaldson is the Chief Operating Officer at MVP Hospital in Boulder, Colorado. She is analyzing the hospital's 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. She has gathered the following information for the last six months of the most recent year: (Click the icon to view the information) Read the requirements. Requirement 1. Are the hospital's overhead costs fixed, variable, or mixed? Explain. SE The hospital's overhead costs appear to be a mixed cost. If it were a fixed cost, it would remain constant in total each month. If it were a variable cost, it would remain constant on a per unit of activity) basis. Both of the hospital's overhead cost per nursing hour and overhead cost per patient day vary with volume an (After you hit continue the screen may take you below the beginning of the next step. If so, scroll back up to the top of the step.) Requirement 2. Graph the hospital's overhead costs against nursing hours, QL Plot the points on the graph. (Enlarge the graph and use the point tool button displayed below to draw the graph) 18 Relationship of Hospital Overhead Costs to Nursing Hours Overhead Costs povy up to the top of the sto Requirement 3. Graph the hospital's overhead costs against the number of patient days. Plot the points on the graph (Enlarge the graph and use the point tool button displayed below to draw the graph.) Relationship of Hospital Overhead Q Costs to Number of Patient Days T . Hospital Overhead Costs 3,0932sonororomo Number of Patient Days T L Requirement 4. Do the data appear to be sound, or do you see any potential data problems? Explain There does not appear to be any outlier in the graph depicting overhead costs against nursing hours. In the graph of overhead costs against the number of patient days, there does appear to be an outlier. The September data point appears out of ine with the other data points. If any of the data points are out of line, management should check into this data before continuing with the analysis. Requirement 5. Use the high-low method to determine the hospital's cost equation using nursing hours as the cost driver. Predict total overhead conts # 23,000 nursing hours are predicted for the month Use the high-low method to determine the hospital's cost equation using nursing hours as the cost driver. (Round the variable cost to the nearest cent) Data Table Cost per Cost per Number of Overhead Overhead Patient Days Nursing Hour Patient Day 3,680 $ 21.45 $ 128.26 Hospital Overhead Nursing Month Costs Hours July ..... $ 472,000 22,000 August ..... $ 520,000 27,500 September $ 419,000 18,000 October 456,000 20,000 November 562,000 29,000 December .. $ 450,000 19,000 4,380 $ 18.91 $ 118.72 bsts .. 4,240 $ 23.28 $ 98.82 the 3,430 $ $ 22.80 $ 132.94 5,620 $ 19.38 $ 100.00 3,220 $ 23.68 $ 139.75 Total to the Print Done
