The manager of the main laboratory facility at MetroHealth Center is interested in being able to predict the overhead costs each month for the lab. The manager believes that total overhead varies with the number of lab tests performed but that some costs remain the same each month regardless of the number of lab tests performed. The lab manager collected the following data for the first seven months of the year. (Click the icon to view the data.) Use the high-low method to determine the laboratory's cost equation for total laboratory overhead. Use your results to predict total laboratory overhead if 3,100 lab tests are performed next month
Let's begin by determining the formula that is used to calculate the variable cost (slope) Change in volume Variable cost (slope) Change in cost /
Now determine the formula that is used to calculate the fixed cost component. Total operating cost Total variable cost Fixed cost =
Use the high-low method to determine MetroHealth's operating cost equation. (Round the variable cost to the nearest cent.) 4.40 x$ 10,640 y $
Use the operating cost equation you determined above to predict total laboratory overhead if 3,100 lab tests are performed next month The total laboratory overhead at a volume of 3,100 lab tests is $ X
Data Table 1
Number of Lab Tests Month Performed Total Laboratory Overhead Costs
January. . . . . . . . . 3,200 $27,200
February. . . . . . . . 2,900 $26,500
March. . . . . . . . . 3,700 $30,300
April. . . . . . . . . . . . 4,100 $32,600
May. . . . . . . . . . . 4,400 $30,000
June. . . . . . . . . . 1,900 $19,000
July. . . . . . . . . . . 2,500 $19,400

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of the three mortgage options that demarco and tanya have to choose from, the balloon payment mortgage would be their best option, over adjustable payment and fixed payment plans.ultimately, the balloon payment plan would save demarco and tanya overall, in interest, would cost less monthly, and they would only have to make these payments for 8 years, opposing to 30 years for adjustable or fixed payment plans. 

overall, demarco and tanya would save $80,811 if they chose balloon payments over fixed payments, and would save $116,711 if they choose balloon payments over adjustable payments. benefits with choosing fixed payments over adjustable payments is that, in the end, the payments will still be $836.30 a month, while with adjustable payments, the initial monthly payments will be $763.38 to $1082.70 a month, ultimately leading to a more costly purchase. benefits with choosing fixed payments over balloon payments are not present. benefits in choosing adjustable payments over is that it has a lower interest rate, and starts with lower monthly payments initially. benefits in choosing adjustable payments over balloon payments include a lower interest rate, and lower initial monthly payments. benefits in choosing balloon payments over fixed payments include lower interest rates, lower overall price, lower monthly payments, takes less time to pay off, and does not require a downpayment. benefits in choosing balloon payments over adjustable payments include, lower monthly payments (when averaged), takes less time to pay off, and lower overall price.

hence, option c, balloon payments, is the best option for demarco and tanya to make this purchase, for it will save them a minimum of $80811, and a maximum of $116,711.