Question

Question 2 - Selecting a cost driver Iggy Hospital is a small animal hospital that specializes in minor surgeries. Timmy Snyder, Iggy's CEO, Is concerned about the hospital's consumption of medical supplies. Timmy asks Tommy Poon, Iggy's CFO, to better understand the behavior of this cost. Tommy believes that there are two potential cost drivers for the hospital's medical supplies costs - the total number of procedures performed and the number of patient-hours generated by Iggy. Tommy has collected the following data. Number of Procedures 32 Number of Patient-Hours 200 410 160 400 340 320 Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9 Week 10 Week 11 Week 12 Week 13 Week 14 Week 15 Medical Supplies Cost $10,600 $23,000 $8,400 $23,800 $19,300 $18,000 $21,000 $25,000 $13,500 $16,500 $9,200 $22,200 $7,800 $12,700 $22,500 350 420 180 270 150 370 130 240 380

Answer 1

А LM G H Medical Supplies Cost vs Number of Procedures y = 452.94% R? 0.5213 20 y 368.75x + 3403.B $30,000.00 $25,000.00 $20,000.00 Number of Medical Supplies Procedures X Cost Y 32 $ 10,600.00 47 $ 23,000.00 26 $ 8,400.00 49 $ 23,800.00 19,300.00 18,000.00 52 $ 21,000.00 55 $ 25,000.00 20 $ 13,500.00 25 $ 16,500.00 36 $ 9,200.00 36 $ 22,200.00 12 $ 7,800.00 41 $ 12,700.00 38 $ 22,500.00 21 Week 1 22 Week 2 23 Week 3 24 Week 4 25 Week 5 26 Week 6 27 Week 7 28 Week 8 29 Week 9 30 Week 10 31 Week 11 32 Week 12 33 Week 13 34 Week 14 35 Week 15 36 b) $15,000.00 $10,000.00 $5,000.00 10 20 30 1 40 50 60 70 y = 58.583x RP = 0.9685 Medical Supplies Cost Vs Number of Patient Hours y =57.778x + 259.96 $30,000.00 $25,000.00 $20,000.00 Number of Patient Medical Supplies Hours X Cost Y 200 $ 10,600.00 410 $ 23,000.00 160 $ 8,400.00 400 $ 23,800.00 340 $ 19,300.00 320 $ 18,000.00 350 $ 21,000.00 420 $ 25,000.00 180 $ 13,500.00 270 $ 16,500.00 150 $ 9,200.00 370 $ 22,200.00 130 $ 7,800.00 240 $ 12,700.00 380 $ 22,500.00 37 38 Week 1 39 Week 2 40 Week 3 41 Week 4 42 Week 5 43 Week 6 44 Week 7 45 Week 8 46 Week 9 47 Week 10 48 Week 11 49 Week 12 50 Week 13 51 Week 14 52 Week 15 $15,000.00 $10,000.00 WIRECTIE $5,000.00 0 50 100 150 200 250 300 350 400 450 53 54 C) 55 The number of patient-hours is a better cost driver for predicting medical supplies costs because Rsquare is 96.85% and its line of best fit.

d) Timmy expects that the hospital will perform 45 procedures and generate 480 patient-hours in week 16. Using the cost driver you chose in (c), help Timmy estimate the medical supplies costs for week 16.
Week 16 = 368.75 x 45 procedures + 3403.8	$ 19,997.55
Week 16 = 57.778 x 480 patient hours + 259.96	$ 27,993.40