Month Radiology Tests Total Cost January February 2,800 2,600 $133,500 135,060 March 3,100 3,500 175,000 170,600 Аpril Мay 3,400 176,900 June 3,700 186,600 174,450 July August September 3,840 4,100 3,450 195,510 185,300
Scattergraph Method, High-Low Method
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 num-
ber 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 for-
mula found in Requirement 2.
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