Davis Stores sells clothing in 15 stores located around the southwestern United States. The managers at Davis are considering expanding by opening new stores and are interested in estimating costs in potential new locations. They believe that costs are driven in large part by store volume measured by revenue. The following data were collected from last years operations (revenues and costs in thousands of dollars).

Store	Revenues	Costs
101	$4,180	$4,334
102	2,307	3,054
103	5,858	5,301
104	4,142	4,198
105	3,034	3,916
106	4,183	3,599
107	6,974	5,149
108	1,899	2,774
109	5,816	5,008
110	3,468	3,199
111	4,046	4,379
112	4,890	3,360
113	3,632	2,796
114	5,137	4,815
115	2,524	3,106

Exercise 5-44 (Algo) Methods of Estimating Costs: Simple Regression (LO 5-5)

Simple regression results from the data of Davis Stores are as follows.

Equation:
Store costs = $1,789.9 + (Revenue 51.8%)
Statistical data
Correlation coefficient	0.838
R2	0.703

Required:

a. Estimate store costs for a store with revenue of $3.3 million.

b. What percentage of the variation in store costs is explained by the independent variable?