You must show all relevant calculations. Question 1 Jeff Mahoney, the newly appointed administrator of Valley General Hospital exclaimed "Our administrative costs in the new paediatrics clinic are all over the map. One month the report shows 5?,000, and the next month it's $13,900. What's going on?" Mahoney's question was posed to Megan McDonough, the hospital's director of cost management. "The main problem is that the clinic has experienced some widely varying patient loads in its first year of operation. There seems to be some confusion in the public's mind about what services we offer in the clinic. When do they come to the clinic? When do they go to the emergency room? That sort ofthing. As the patient load has varied, we've frequently changed our clinic administrative staffing." Mahoney continued to puzzle over the report. "Could you pull some data together, Megan, so we can see how this cost behaves over a range of patient loads?\" "You'll have it this afternoon,\" McDonough responded. Later that morning, she gathered the following data: m ruin-1w 1mm m 000 t 0.000 Maury 500 7.000 1.000 .. 11110 000 .. 0200 1.300 .. 11.000 1.000 .. 10.0110 100 .. 2000 000 .. . 4.100 1.100 .. 10200 1.500 10100 000 0.000 1.300 .. 11.100 McDonough does not believe the first year's widely fluctuating patient ioad will be experienced again in the future. She has estimated that the clinic's relevant range of monthly activity in the future will be 600 to 1,200 patients. Required 1. Draw a scatter diagram of the clinic's administrative costs during its first year of operation. Visually fit a curvilinear cost line to the plotted data. Mark the clinic's relevant range of activity on the scatter diagram. Visually fit a semi variable-cost line to approximate the curvilinear cost behaviour pattern within the clinic's relevant range. Estimate the fixed- and variable-cost components of the visually fit semi variable-cost line. Use an equation to express the semi variable-cost approximation of the clinic's administrative costs. What is your prediction of the clinic's administrative cost during a month when 750 patients visit the clinic? When 350 patients visit? Which one of your visually fit cost lines did you use to make each of these predictions? Why? 3. Use the high-low method to estimate the cost behaviour for the clinic's administrative costs. Express the cost behaviour in formula form {Y= o+ bX]. What is the variable cost per patient? Compare your results with part 6 above. HP'WPP'E"