The number of blood tests performed and the related costs over the last nine mon

Question

The number of blood tests performed and the related costs over the last nine months in Brentline Hospital are given below: Blood Tests Performed 3,720 4,000 2,915 2,460 2,708 1,800 2,306 3,465 3,325 Blood Test Costs $31,276 $32,600 $25,006 $21,578 $23,972 $17,200 $20,312 $28,613 $28,367 Month January February March May June August September Required 1. Using the high-low method, estimate the cost formula for blood tests. (Round cost per unit answer to 2 decimal place) 2. Using the cost formula you derived above, what blood test costs would you expect to be incurred during a month in which 2,790 blood tests are performed? (Round your intermediate calculations answer to 0 2 decimal places.) Variable cost Fixed cost Total cost 0

Explanation / Answer

1).

Variable Cost Per Blood Test :-

= $15400/2200

= $7 per blood test

Fixed Cost Per Month :-

Blood Test cost at high activity lavel = $32600

Less : Variable Cost (4000*$7) = ($28000)

Total Fixed Cost ($32600 - $28000) = $4600

Cost formula :-

Y = $4600 + $7*X

2). Calculation of Total Cost of 2790 Blood Tests :-

Particulars Blood Tests Performed Blood Test Costs High activity Level 4000 $32600 Low Activity Lavel 1800 $17200 Defference 2200 $15400

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