Recent research into the cost of various medical procedures has shown the impact of certain complications encountered in surgery onthe total cost of a patient's stay in the hospital. The researchers used regression analysis and found the following results:Total cost for patient = Constant, plusax Length of stay (measured in days), plusbx Presence of one or more complications (= 1 if true, O if false), pluscx Use of a laparoscope (= 1 if true, 0 if false)where a, b, c are coefficients of the regression model. The laparoscope is an instrument somewhat like a miniature telescope with afiber-optic system that brings light into the abdomen. It is about as big around as a fountain pen and twice as long.The research, based on 52 patients, showed the following regression results:R-squared: 59%Constant term: $3,402Coefficients and t-values for independent variables:Coefficientt-valueLength of Stay$ 86011.19Complications$ 1,8674.73Laparoscope$ 9153.49Required:1. What is the estimated cost for a patient whose surgery has complications and who stays in the hospital 5 days, and whose surgeryrequires a laparoscope?Estimated cost

Given:Constant term: $3,402Coefficient for Length of Stay: $860Coefficient for Complications:…

Answered: Recent research into the cost of…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter3: Cost Behavior

Section: Chapter Questions

Problem 18E

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In the cost formula, the term 12,000 a. is the variable rate. b. is the dependent variable. c. is the independent variable. d. is the intercept. e. cannot be determined from the above formula. Use the following information for Multiple-Choice Questions 3-4 through 3-7: The following cost formula was developed by using monthly data for a hospital. Total Cost = 128,000,000 + (12,000 Number of Patient Days)
Deepa Dalal opened a free-standing radiology clinic. She had anticipated that the costs for the radiological tests would be primarily fixed, but she found that costs increased with the number of tests performed. Costs for this service over the past nine months are as follows: Required: 1. Prepare a scattergraph based on the preceding data. Use cost for the vertical axis and number of radiology tests for the horizontal axis. Based on an examination of the scattergraph, does there appear to be a linear relationship between the cost of radiology service and the number of tests? 2. Compute the cost formula for radiology services using the high-low method. 3. Calculate the predicted cost of radiology services for October for 3,500 tests using the formula found in Requirement 2.
Glencoe Medical Clinic operates a cardiology care unit and a maternity care unit. Colby Hepworth, the clinic’s administrator, is investigating the charges assigned to cardiology patients. Currently, all cardiology patients are charged the same rate per patient day for daily care services. Daily care services are broadly defined as occupancy, feeding, and nursing care. A recent study, however, revealed several interesting outcomes. First, the demands patients place on daily care services vary with the severity of the case being treated. Second, the occupancy activity is a combination of two activities: lodging and use of monitoring equipment. Since some patients require more monitoring than others, these activities should be separated. Third, the daily rate should reflect the difference in demands resulting from differences in patient type. Separating the occupancy activity into two separate activities also required the determination of the cost of each activity. Determining the costs…
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You are working as a practice pharmacist and have been asked to help the practice reduce expenditure on medicines. As a result, you are reviewing the use of Osteofix 4 mg m/r tablets, as these costs more than Osteofix 2 mg tablets at an equivalent dose. (A patient would either take Osteofix 4mg m/r 1 tablet once daily or osteofix 2mg twice daily). Current costs are shown below: Osteofix 4 mg m/r tablets £25.78 per 28 tablets Osteofix 2 mg tablets £2.88 per 56 tablets You have found 6 patients who are suitable for the switch. What is the total saving for the practice per 84 days assuming 6 suitable patients switch to using the osteofix 2 mg tablets? Give your answer to the nearest pound. unit £
A clinic’s records show that the cost of carrying out health checks in the last five accounting periods have been as follows: Period No. of patients seen Total costs (RM) 1 650 17,125 2 940 17,800 3 1260 18,650 4 990 17,980 5 1150 18,360 Using the high-low method and ignoring inflation, what are the estimated cost of carrying out health checks on 850 patients in period 6?
Weber Valley Regional Hospital has collected data on all of its activities for the past 16 months. Data for cardiac nursing care follow: Required: 1. Using the high-low method, calculate the variable rate per hour and the fixed cost for the nursing care activity. 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. Evaluate the regression equation. How comfortable are you with the predicted cost for September Year 2? 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. Discuss your findings. What is your predicted cost of the cardiac nursing care activity for September Year 2?
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Pareto chart and cost of quality report for a service company The administrator of Liberty Hospital has been asked to perform an activity analysis of the emergency room (ER). The ER activities include cost of quality and other patient care activities. The lab tests and transportation are hospital services external to the ER for determining external failure costs. The result of the activity analysis is summarized as follows: Activities Activity Cost Patient registration $ 6,500 Verifying patient information 9,700 Assigning patients 13,000 Searching/waiting for doctor 9,200 Doctor exam 4,900 Waiting for transport 17,500 Transporting patients 16,200 Verifying lab orders 14,500 Searching for equipment 8,200 Incorrect labs 11,300 Lab tests 17,000 Counting supplies 19,000 Looking for supplies 8,200 Staff training 4,800 Total $160,000 a. b. c. d. Classify the…

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