Question

The controller of Joyce Hospital relies on regression analysis to estimate medical supply costs, and uses the number of procedures as the cost driver. The estimated Intercept is 30,000 and the reported R-squared for the regression is .80. There were 400 procedures administered in January, and total medical supply costs for January amounted to $90,000. What is the estimated variable cost per procedure?

Answer 1

The answer is "$225" .

Step-by-step explanation:

Given:

Total medical expenses
`= \$ 90,000`

Number of procedures
`= 400`

Formula:

`\text{The variable cost per procedure} =\frac{\text{Total medical expenses}}{\text{number of procedures }}`

`=(\$ 90,000)/(400)\\\\=(\$ 900)/(4)\\\\= \$ 225`