Steven is the cost accountant at the Lansing Health Center. He has been asked by the...

Steven is the cost accountant at the Lansing Health Center. He has been asked by the CFO to analyze the center's overhead costs to determine whether nursing hours or the number of patient days would be the best cost driver to use for predicting the center's overhead. He has the following information for the last six months of the most recent year:

Month	Center Overhead Costs	Nursing Hours	Number of Patient Days
July	$476,000	24,000	3,720
August	$512,000	26,000	4,320
September	$424,000	20,000	4,220
October	$448,000	22,500	3,470
November	$555,000	30,000	5,690
December	$431,000	22,000	3,210

Answer the following questions about the Lansing Health Center. Each question is worth 1 point.

1. Are center overhead costs fixed, variable, or mixed? Use the data in the table in arriving at your conclusion.
Variable Fixed Mixed Center Overhead Costs

2. Using the high-low method and nursing hours as a driver of overhead, what is the variable cost per unit?

3. Estimate total center overhead costs if the Lansing Health Center incurs 23,604 of nursing hours in January of the next year using the information from the high-low method gathered in Question #2.

4. Estimate total center overhead costs if the Lansing Health Center uses patient days as a driver and the high-low method and assuming the center incurs 3,900 of patient days in January of the next year.

Expert Solution

ekkarill92 answered 2 years ago

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