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Using the high-low method and regression analysis, determine the variable and fixed costs of the in-house meal service.

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Using the high-low method and regression analysis, determine the variable and fixed costs of the in-house meal service.

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The Brenham General Hospital was approached by Health Food, Inc. (HFI) which specializes in the preparation of meals for institutional patients. HFI stated that it would prepare all inpatient meals to provider specifications and deliver them on time for $11.50 per meal. The hospital was facing a steady decline in bed occupancy and was determined to hold the line on costs wherever possible.

Hospital management did not have a clear idea what the present system of providing meals to patients was costing. Hospital staff gathered the information below, which covered expenses for the dietary department for the past year.

The hospital has 120 beds. It is open year-round and has a 33% percent occupancy rate. Patients are served an average of 2.8 meals per occupancy day.

It was determined that the dietitian provided valuable counseling and advising services. Should the hospital eliminate in house meal preparation, it would want to retain her services. Also, the administration wanted to keep and maintain the kitchen and equipment.

Other Food Patient
Dietitian staff Costs Maintenance Equipment Days
January $2,875 $ 3,122 $ 9,674 $ 1,401 $ 1,649 1,382
February $2,875 $ 2,908 $ 9,184 $ 1,322 $ 1,415 1,312
March $2,875 $ 2,655 $ 8,302 $ 1,322 $ 1,313 1,186
April $2,875 $ 2,600 $ 7,084 $ 1,288 $ 1,105 1,012
May $2,875 $ 2,433 $ 6,398 $ 1,200 $ 1,089 914
June $2,875 $ 2,083 $ 4,338 $ 1,133 $ 1,011 604
July $2,875 $ 1,809 $ 3,612 $ 1,093 $ 900 516
August $2,875 $ 2,322 $ 6,275 $ 1,122 $ 1,112 896
September $2,875 $ 1,434 $ 6,734 $ 1,235 $ 1,103 962
October $2,875 $ 2,700 $ 9,002 $ 1,302 $ 1,300 1,286
November $2,875 $ 2,798 $ 8,456 $ 1,300 $ 1,442 1,208
December $2,875 $ 2,600 $ 7,798 $ 1,322 $ 1,396 1,114
TOTAL $34,500 $29,464 $86,857 $ 15,040 $ 14,835 12,392

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