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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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