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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	$4,120	$4,244
102	2,247	2,934
103	5,768	5,211
104	4,022	4,048
105	2,944	3,736
106	4,063	3,389
107	6,914	5,059
108	1,809	2,474
109	5,516	4,768
110	3,288	3,019
111	3,926	4,229
112	4,740	3,240
113	3,572	2,616
114	4,897	4,695
115	2,224	3,016

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

Equation:
Store costs = $1,648.0 + (Revenue 53.2%)
Statistical data
Correlation coefficient	0.837
R2	0.701

Required:

a. Estimate store costs for a store with revenue of $2.7 million.

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