High-Low Method and Predicting Cost Black Forest Clinic contains 340 beds. The average occupancy rate is 85% per month. In other words, an average of 85% of the clinic’s beds are occupied by patients. At this level of occupancy, the clinics operating costs are $40 per occupied bed per day, assuming a 30-day month. This $40 cost contains both variable and fixed cost elements. During November, the clinic’s occupancy rate was only 70%. A total of $339,150 in operating cost was incurred during the month. Required: 1. Using the high-low method, estimate: a. The variable cost per occupied bed on a daily basis. b. The total fixed operating costs per month. 2. Assume an occupancy rate of 80% per month. What amount of total operating cost would you expect the clinic to incur?
