The director of surgery at a local hospital is interested in understanding his units costs. An assistant collected data for the past 36 months on unit cost (labor, supplies, and so on) along with the number of procedures performed in the unit. The assistant analyzed the data using a spreadsheet program, and the following output was generated.

Equation
Intercept	$	1,009,000
Coefficient on procedures	$	245
Statistical data
Correlation coefficient		0.533
R2		0.283

The unit is planning to perform an average 20,000 procedures per month for the coming year.

Required:

a. Use the regression output to write the surgical unit cost equation.

A.

Surgical units

=

0.00

+

0.00

x

Procedures

b. Based on the cost equation, compute the estimated costs for the surgical unit per month for the coming year.

B.

Surgical cost

0.00

c. The director of surgery has asked you for advice on whether he should rely on the estimate.

C.	Yes
	No