Question
Bargain Rental Car offers rental cars in an off-airport location near a major tourist destination in California. Management would like to better understand the variable
Bargain Rental Car offers rental cars in an off-airport location near a major tourist destination in California. Management would like to better understand the variable and fixed portions of its car washing costs. The company operates its own car wash facility in which each rental car that is returned is thoroughly cleaned before being released for rental to another customer. Management believes that the variable portion of its car washing costs relates to the number of rental returns. Accordingly, the following data have been compiled:
Month Rental Returns Car Wash Costs January 2,400 $ 10,700 February 2,500 $ 13,000 March 2,700 $ 11,500 April 3,000 $ 13,800 May 3,600 $ 15,900 June 5,000 $ 22,700 July 5,500 $ 21,900 August 5,400 $ 21,400 September 4,700 $ 22,500 October 3,900 $ 20,200 November 2,200 $ 10,400 December 2,700 $ 13,200
2. Using least-squares regression, estimate the variable cost per rental return and the monthly fixed cost incurred to wash cars. (Round Fixed cost to the nearest whole dollar amount and the Variable cost per unit to 2 decimal places.)
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Bargain Rental Car offers rental cars in an off-airport location near a major tourist destination in California. Management would like to better understand the variable and fixed portions of its car washing costs. The company operates its own car wash facility in which each rental car that is returned is thoroughly cleaned before being released for rental to another customer. Management believes that the variable portion of its car washing costs relates to the number of rental returns. Accordingly, the following data have been compiled:
Month | Rental Returns | Car Wash Costs |
---|---|---|
January | 2,400 | $ 10,700 |
February | 2,500 | $ 13,000 |
March | 2,700 | $ 11,500 |
April | 3,000 | $ 13,800 |
May | 3,600 | $ 15,900 |
June | 5,000 | $ 22,700 |
July | 5,500 | $ 21,900 |
August | 5,400 | $ 21,400 |
September | 4,700 | $ 22,500 |
October | 3,900 | $ 20,200 |
November | 2,200 | $ 10,400 |
December | 2,700 | $ 13,200 |
2. Using least-squares regression, estimate the variable cost per rental return and the monthly fixed cost incurred to wash cars. (Round Fixed cost to the nearest whole dollar amount and the Variable cost per unit to 2 decimal places.)
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