EXERCISE 3–8 High–Low Method; Predicting Cost [LO2]
The number of blood tests performed and the related costs over the last nine months in Brentline Hospital are given below:
|
Month |
Blood Tests Performed |
Blood Test Costs |
|
January . . . . . . . . . . . . . . . . . . . . . . . |
3,125 |
$14,000 |
|
February. . . . . . . . . . . . . . . . . . . . . . . |
3,500 |
$14,500 |
|
March . . . . . . . . . . . . . . . . . . . . . . . . . |
2,500 |
$ 11,500 |
|
April . . . . . . . . . . . . . . . . . . . . . . . . . . . |
2,125 |
$10,000 |
|
May . . . . . . . . . . . . . . . . . . . . . . . . . . . |
2,250 |
$ 11,000 |
|
June . . . . . . . . . . . . . . . . . . . . . . . . . . |
1,500 |
$ 8,500 |
|
July . . . . . . . . . . . . . . . . . . . . . . . . . . . |
1,550 |
$ 8,400 |
|
August. . . . . . . . . . . . . . . . . . . . . . . . . |
2,750 |
$12,000 |
|
September . . . . . . . . . . . . . . . . . . . . |
2,875 |
$13,000 |
Required:
1. Using the high–low method, estimate the cost formula for blood tests.
2. Using the cost formula you derived above, what blood test costs would you expect to be incurred during a month in which 2,300 blood tests are performed?
