Question

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

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		$	10,800
February	2,500		$	13,000
March	2,700		$	11,600
April	3,000		$	14,000
May	3,600		$	16,000
June	5,000		$	22,900
July	5,500		$	22,000
August	5,400		$	21,700
September	4,700		$	22,600
October	3,900		$	20,500
November	2,200		$	10,500
December	2,700		$	13,500

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.)

Answer 1