Use the high-low method to determine the hospital's cost equation using nursing hours as the cost...

    

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Use the high-low method to determine the hospital's cost equation using nursing hours as the cost driver. Predict total overhead costs if 25,500 nursing hours are predicted for the month. Cleary runs a regression analysis using nursing hours as the cost driver to predict total hospital overhead costs. The Excel output from the regression analysis is as follows: |(Click the icon to view the regression analysis.) If 25,500 nursing hours are predicted for the month, what is the total predicted hospital overhead? Cleary then ran the regression analysis using number of patient days as the cost driver. The Excel output from the regression is shown here: |(Click the icon to view the regression analysis.) If 3,710 patient days are predicted for the month, what is the total predicted hospital overhead? Which regression analysis (using nursing hours or using number of patient days as the cost driver) produces the best cost equation? Explain your answer. SUMMARY OUTPUT - Nursing hours as cost driver Regression Statistics Multiple R R Square 0.967848 0.93673 Adjusted R Square 0.920913 Standard Error 16,568.3268 Observations 6 ANOVA df MS F Significance F Regression 1 16,256,795,521 16,256,795,521 59.221259 0.001534 Residual 1,098,037,812 274,509,453 Total 17,354,833,333 Standard Lower Upper Coefficients Error t Stat P-value 95% 95% Intercept 187,378.98 39,923.061 4.694 0.009 76,534.789 298,223.164 X Variable 1 12.44 1.617 7.696 0.000 7.954 16.933 4. SUMMARY OUTPUT - Using number of patient days as cost driver Regression Statistics Multiple R 0.757705 R Square 0.574117 Adjusted R Square 0.467646 Standard Error 42,985.84532 Observations ANOVA df SS MS F Significance F Regression 1 9,963,701,742 9,963,701,742 5.392247 0.080948 Residual 4 7,391,131,591 1,847,782,898 Total 5 17,354,833,333 Standard Lower Upper Coefficients Error t Stat P-value 95% 95% Intercept 271,537.44 95,772.174 2.835 0.047 5,631.253 537,443.62 X Variable 1 53.13 22.88 2.322 0.081 -10.395 116.655 Hospital Nursing Number of Overhead Cost Overhead Cost Month Overhead Costs Hours Patient Days per Nursing Hour per Patient Day July ...... 485,000 25,000 3,800 $ 19.40 $ 127.63 August 540,000 26,700 4,360 $ 20.22 $ 123.85 September .. $ 420,000 20,000 4,210 $ 21.00 $ 99.76 October ..... $ 462,000 21,900 3,450 $ 21.10 $ 133.91 November ... $ 579,000 32,000 5,600 $ 18.09 $ 103.39 December ...$ 455,000 20,400 3,270 $ 22.30 $ 139.14 %24 %24 Use the high-low method to determine the hospital's cost equation using nursing hours as the cost driver. Predict total overhead costs if 25,500 nursing hours are predicted for the month. Cleary runs a regression analysis using nursing hours as the cost driver to predict total hospital overhead costs. The Excel output from the regression analysis is as follows: |(Click the icon to view the regression analysis.) If 25,500 nursing hours are predicted for the month, what is the total predicted hospital overhead? Cleary then ran the regression analysis using number of patient days as the cost driver. The Excel output from the regression is shown here: |(Click the icon to view the regression analysis.) If 3,710 patient days are predicted for the month, what is the total predicted hospital overhead? Which regression analysis (using nursing hours or using number of patient days as the cost driver) produces the best cost equation? Explain your answer. SUMMARY OUTPUT - Nursing hours as cost driver Regression Statistics Multiple R R Square 0.967848 0.93673 Adjusted R Square 0.920913 Standard Error 16,568.3268 Observations 6 ANOVA df MS F Significance F Regression 1 16,256,795,521 16,256,795,521 59.221259 0.001534 Residual 1,098,037,812 274,509,453 Total 17,354,833,333 Standard Lower Upper Coefficients Error t Stat P-value 95% 95% Intercept 187,378.98 39,923.061 4.694 0.009 76,534.789 298,223.164 X Variable 1 12.44 1.617 7.696 0.000 7.954 16.933 4. SUMMARY OUTPUT - Using number of patient days as cost driver Regression Statistics Multiple R 0.757705 R Square 0.574117 Adjusted R Square 0.467646 Standard Error 42,985.84532 Observations ANOVA df SS MS F Significance F Regression 1 9,963,701,742 9,963,701,742 5.392247 0.080948 Residual 4 7,391,131,591 1,847,782,898 Total 5 17,354,833,333 Standard Lower Upper Coefficients Error t Stat P-value 95% 95% Intercept 271,537.44 95,772.174 2.835 0.047 5,631.253 537,443.62 X Variable 1 53.13 22.88 2.322 0.081 -10.395 116.655 Hospital Nursing Number of Overhead Cost Overhead Cost Month Overhead Costs Hours Patient Days per Nursing Hour per Patient Day July ...... 485,000 25,000 3,800 $ 19.40 $ 127.63 August 540,000 26,700 4,360 $ 20.22 $ 123.85 September .. $ 420,000 20,000 4,210 $ 21.00 $ 99.76 October ..... $ 462,000 21,900 3,450 $ 21.10 $ 133.91 November ... $ 579,000 32,000 5,600 $ 18.09 $ 103.39 December ...$ 455,000 20,400 3,270 $ 22.30 $ 139.14 %24 %24

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5 Variable Cost per nursing hour 57900042000032000... View the full answer