Question

High-Low Method, Scatterplot, Regression

Weber Valley Regional Hospital has collected data on all of its activities for the past 16 months. Data for cardiac nursing care follow:

	Y Cost			X Hours of Nursing Care
May Year 1		$59,600		1,400
June Year 1		57,150		1,350
July Year 1		61,110		1,460
August Year 1		65,800		1,600
September Year 1		69,500		1,700
October Year 1		64,250		1,550
November Year 1		52,000		1,200
December Year 1		66,000		1,600
January Year 2		83,000		1,800
February Year 2		66,550		1,330
March Year 2		79,500		1,700
April Year 2		76,000		1,600
May Year 2		68,500		1,400
June Year 2		73,150		1,550
July Year 2		73,175		1,505
August Year 2		66,150		1,290

Required:

In the computations below, use intercepts rounded to the nearest whole number and use X variable coefficients rounded to 2 decimal places.

1. Using the high-low method, calculate the variable rate per hour and the fixed cost for the nursing care activity. Enter negative answers with a minus sign.

Y

=

$_______

+

$________X

2. Run a regression on the data, using hours of nursing care as the independent variable. Predict cost for the cardiac nursing care for September Year 2 if 1,400 hours of nursing care are forecast. If required, round your answer to the nearest dollar.

Y = $___________

3. Upon looking into the events that happened at the end of Year 1, you find that the cardiology ward bought a cardiac-monitoring machine for the nursing station. Administrators also decided to add a new supervisory position for the evening shift. Monthly depreciation on the monitor and the salary of the new supervisor together total $10,000. Now, run two regression equations, one for the observations from Year 1 and the second using only the observations for the eight months in Year 2. What is your predicted cost of the cardiac nursing care activity for September Year 2 if 1,400 hours of nursing care are forecast? When required, round your answer to two decimal places.

Y = $__________

Answer 1