Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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 it 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 2,500 $ 11,900
February 2,500 $ 13,600
March 2,800 $ 12,700
April 3,100 $ 15,600
May 3,700 $ 17,100
June 5,200 $ 25,100
July 5,600 $ 23,100
August 5,700 $ 24,400
September 4,800 $ 23,700
October 4,500 $ 23,800
November 2,300 $ 11,600
December 3,100 $ 17,400

2. Using least-squares regression, estimate the variable cost per rental return and the monthly fixed cost incurred to wash cars. What is the R2 rounded to the nearest whole percentage? (Round Fixed cost to the nearest whole dollar amount and the Variable cost per unit to 2 decimal places.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Accounting questions

Question

Evaluating Group Performance?

Answered: 1 week ago