Explain cost formula in the linear equation

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Reference no: EM13115752

The administrator of Azalea Hills Hospital would like a cost formula linking the costs involved in admitting patients to the number of patients admitted during a month. The admitting department's costs and the number of patients admitted during the immediately preceding eight months are given in the following table.

MONTH Number of Admitting Department

Patients Admitted Costs

May.................... 1,800 $14,700
June.................... 1,900 15,200
July.................... 1,700 13,700
August................ 1,600 14,000
September............ 1,500 14,300
October............... 1,300 13,100
November............ 1,100 12,800
December............ 1,500 14,600

Required:

1. Use the high-low method to establish the fixed and variable components of admitting costs.

2. Express the fixed and variable components of admitting costs as a cost formula in the linear equation form Y = a + bX.

Reference no: EM13115752

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