Case $6-48$

ipproximating a Curvilinear

Iost; Visual$-$Fit Method;

ediatrics Clinic

$01,2,5$

Administrative cost

$$7,000+$$$3\mathrm{.}00x,$ where $x$

notes number of patients

$($Note: Instructors who wish to cover all three cost$-$estimation methods with the same data set may

assign this case in conjunction with the following case.$)$

"I don't understand this cost report at all," exclaimed Jeff Mahoney, the newly appointed adminis$-$

trator of Mountainview General Hospital. "Our administrative costs in the new pediatrics clinic are al

over the map. One month the report shows $$8,300,$ and the next month it's $$16,100.$ What's going on$?"$

Mahoney's question was posed to Megan McDonough, the hospital's director of Cost Manage$-$

ment. "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 of

thing. 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: