Waveney DIY Centers (WDC) operates a few dozen stores in the eastern United States. The stores are popular with home remodelers, contractors, and do-it-yourself customers. The managers at Waveney are interested in understanding what drives costs as well as getting better cost estimates when planning new stores. The area manager for the Southeast Region is interested in new data analysis approaches to management and offered to run a test using data from the 14 stores in the region.

The initial thoughts of the managers and the financial analysts in the region were that two primary factors drove store costs: store area (square footage) and revenue. The following data were collected from the most recent year of operations (revenues and costs in thousands of dollars). Store Revenues ($000) Area (Square Feet) Costs ($000) SE-01 $ 21,345 69,947 $ 16,599 SE-02 16,282 52,217 13,295 SE-03 26,521 84,131 20,010 SE-04 20,189 68,174 15,879 SE-05 20,466 59,309 15,912 SE-06 18,556 68,174 14,899 SE-07 25,305 96,548 19,491 SE-08 13,501 46,898 11,547 SE-09 23,881 78,812 18,253 SE-10 16,630 62,855 13,664 SE-11 21,158 66,401 16,433 SE-12 17,920 73,493 14,597 SE-13 14,474 62,855 12,370 SE-14 23,704 75,266 18,094

Results from a regression of store costs on revenues are as follows. Equation: Store costs = $2,991.22 (in thousands) + (72.6% Revenue) Statistical data Correlation coefficient 0.999 R2 0.998

Required: The managers in the region are interested in opening a new store with expected revenues of $23.0 million. Assuming the data and cost estimates from the current stores are appropriate for the new store (SE-17), what are the estimated store costs for store SE-17 using the results from this regression? Note: Do not round your intermediate calculations. Enter your answer in thousands of dollars rounded to 2 decimal places.