Question
The administrator of Good Health Hospital would like a cost formula linking the costs involved in admitting patients to the number of patients admitted during
The administrator of Good Health Hospital would like a cost formula linking the 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:
Month | Number of patients admitted | Admitting 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 |
January | 1,850 | $ |
February | 2,100 |
|
March | 2,500 |
|
April |
|
|
May |
|
|
June |
|
|
Required:
1. Used the high-low method to establish the fixed and variable component of admitting costs. Present the cost formula in the linear equation form.
2. Use the cost formula to make a cost projection for the months of January, February, March, April, May and June.
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