The administrator of Azalea Hills Hospital would like a cost formula linking the administrative

costs involved in admitting patients to the number of patients admitted during a month. The Admitting

Departments costs and the number of patients admitted during the immediately preceding eight months are given in the following table:

Number of Admitting

Month Patients Admitted Department Costs

May . . . . . . . . . . . . . . . 1,800 $14,700

June . . . . . . . . . . . . . . 1,900 $15,200

July . . . . . . . . . . . . . . 1,700 $13,700

August . . . . . . . . . . . . 1,600 $14,000

September . . . . . . . . . 1,500 $14,300

October . . . . . . . . . . . . 1,300 $13,100

November . . . . . . . . . . 1,100 $12,800

December . . . . . . . . . . 1,500 $14,600

Required:

1. Use the high-low method to estimate the fixed and variable components of admitting costs.

2. Express the fixed and variable components of admitting costs as a cost formula in the form

Y = a + bX.