Exercise 5A-2 Least-Squares Regression [LO5-11]

[The following information applies to the questions displayed below.]

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	2,400		$	10,600
February	2,500		$	12,900
March	2,700		$	11,400
April	2,900		$	13,700
May	3,600		$	15,800
June	5,000		$	22,500
July	5,500		$	21,800
August	5,400		$	21,200
September	4,700		$	22,400
October	3,900		$	19,900
November	2,200		$	10,300
December	2,700		$	12,800

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.) Answer is complete but not entirely correct. $ 2,464 X Fixed cost per month Variable cost per rental return $ 3.81