Question
The administrator of Hel Hospital wants a cost formula to forecast the cost of the Admitting Department. The administrator identified the number of patients admitted
The administrator of Hel Hospital wants a cost formula to forecast the cost of the Admitting Department. The administrator identified the number of patients admitted as the cost driver and extracted data related to the preceding six months.
Month | Number of Patients Admitted | Admitting Department Costs |
September | 2,300 | 19,300 |
October | 1,700 | 17,200 |
November | 2,200 | 17,900 |
December | 2,100 | 18,400 |
January | 2,500 | 22,500 |
February | 2,000 | 18,700 |
The administrator has estimated that the hospital's relevant range of monthly activity in the future will be 1,700 to 2,300 patients.
Required:
Can you please Use the high-low method to express the cost function for estimating Admitting Department costs. The cost function needs to be able to reasonably predict future monthly costs for Hel Hospital.
Explain whether you will use this cost function to predict the admitting costs for 1,500 patients.
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