The director of surgery at a local hospital is interested in understanding his unit’s costs. An assistant collected data for the past 36 months on unit cost (labor, supplies, and so on) along with the number of procedures performed in the unit. The assistant analyzed the data using a spreadsheet program, and the following output was generated.



Equation
Intercept $ 1,003,000
Coefficient on procedures $ 215
Statistical data
Correlation coefficient 0.503
R2 0.253

The unit is planning to perform an average 17,000 procedures per month for the coming year.