Question

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 January February March April May June July Rental Returns 2,500 2,500 2,800 3,100 3,700 5,200 5,600 5,700 4,800 4,500 2,300 3,100 Car Wash Costs $ 11,700 $ 13,500 $ 12,500 $ 15,300 $ 16,900 $ 24,700 $ 22,900 $ 23,900 $ 23,500 $ 23,200 $ 11,400 $ 16,700 August September October November December 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

Answer 1

Regression Statistics Multiple R 0.959162929 R Square 0.919993525 Adjusted R Square 0.911992877 Standard Error 1561.950957 Observations ANOVA Regression Residual Total SS 1 2.81E+08 10 24396908 11 3.05E+08 MS gnificance F 280539758.8 114.9899 8.35E-07 2439690.791 t Intercept X Variable 1 Coefficients andard Err 2914.027907 1478.807 3.957023256 0.369011 Stat P-value Lower 95%Up 1.97052591 0.077077 - 380.96 6 10.72333358 8.35E-07 3.134817 Regression Line : Y=a+BX Y=Total Cost , a = Fixed Cost (Interecept). A) Fixed Cost B) Varaible Cost 2914.03 3.96