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High Low Method

The number of X-rays taken and X-ray costs over the last nine months in Beverly Hospital are given below:

Month: X-ray taken X-ray costs

January 6,250 $28,000
Februray 7,000 $29,000
March 5,000 $23,000
April 4,250 $20,000
May 4,500 $22,000
June 3,000 $17,000
July 3,750 $18,000
August 5,500 $24,000
September 5,750 $26,000

1. using the high-low method, estimate the cost formula for X-ray costs.

2. using the cost formula you derived above, what X-ray costs would you expect to be incurred during a month in which 4,600 X-ray are taken?

Solution Preview

We first find the cost function. We take the highest and the lowest cost.
7,000 xrays cost 29,000
3,000 x rays cots 17,000
Then take the ...

Solution Summary

The solution explains the use of high low method to derive the total cost formula.