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Bargain Rental Car wants to better understand the variable and fixed portions of its car washing costs. The company operates its own car wash
Bargain Rental Car wants to better understand the variable and fixed portions of its car washing costs. The company operates its own car wash facility that cleans each rental car before releasing it to another customer. Management believes the variable portion of its car washing costs relates to the number of rental returns. Accordingly, the following data have been compiled: Required: Month Rental Returns Car Wash Costs January 2,380 $10,825 February 2,421 $11,865 March 2,586 $11,332 April 2,725 $12,422 May 2,968 $13,850 June 3,281 $14,419 July 3,353 $14,935 August 3,489 $15,738 September 3,057 $13,563 October 2,876 $11,889 November 2,735 $12,683 December 2,983 $13,796 Page 246 1. Prepare a scattergraph plot. (Place car wash costs on the vertical axis and rental returns on the horizontal axis.) 2. Using least-squares regression, estimate the variable cost per rental return and the monthly fixed cost incurred to wash cars. The total fixed cost should be estimated to the nearest dollar and the variable cost per rental return to the nearest cent.
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