Question

PLEASE SHOW ALL YOUR WORKS HOW YOU SOLVE IT: Fill out 2 white blanks below The manager of the main laboratory facility at Elmhurst Health Center is interested in being able to predict the overhead costs each month for the lab. The manager believes that total overhead varies with the number of lab tests performed but that some costs remain the same each month regardless of the number of lab tests performed. The lab manager collected the following data for the first seven months of the year. Use the high-low method to determine the laboratory's cost equation for total laboratory overhead. Use your results to predict total laboratory overhead if 3,100 lab tests are performed next month. Data Table Number of Lab Tests Performed Total Laboratory Overhead Costs Month $21,900 Use the high-low method to determine Elmhurst Health's operating cost equation. (Round the variable cost to the nearest cent.) y=$_x+$ 3,000 2,850 3,400 January ... February March April May June July .... 3,700 $20,600 $28,900 $31,000 $28,000 $20,200 $14,000 3,900 1,900 2,050 Print Done

Answer 1

Variable cost = ($28,000 - $20,200) / (3,900 - 1,900) = $3.90

Fixed cost = $28,000 - (3,900 X $3.90) = $12,790

y = $3.90x + $12,790

Total laboratory overheads for 3,100 lab tests.

= ($3.90 X 3,100) + $12,790

= $24,880