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Required information 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

Required information

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 $ 11,100
February 2,500 $ 13,200
March 2,700 $ 11,900
April 3,000 $ 14,400
May 3,600 $ 16,300
June 5,100 $ 23,500
July 5,500 $ 22,300
August 5,500 $ 22,400
September 4,700 $ 22,900
October 4,000 $ 21,400
November 2,200 $ 10,800
December 2,800 $ 14,600

Exercise 5A-2 Part 2

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.)

Fixed cost per month
Variable cost per rental return

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