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	Rental Returns		Car Wash Costs
January	2,300		$	10,200
February	2,500		$	12,700
March	2,700		$	11,000
April	2,900		$	13,100
May	3,600		$	15,400
June	4,900		$	21,700
July	5,400		$	21,400
August	5,300		$	20,200
September	4,600		$	22,000
October	3,800		$	18,700
November	2,100		$	9,900
December	2,500		$	11,400

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

Regression Statistics Multiple R 0.95882533 R Square 0.919346013 Adjusted R Square 0.911280614 Standard Error 1441.709814 Observations ANOVA Regression Residual Total SS 1 236923894.8 10 20785271.88 11 257709166.7 MS F gnificance F 236923894.8 113.9864 8.7E-07 2078527.188 Intercept X Variable 1 Coefficients Standard Erret Stat P-value Lower 959 U 2185.465939 1327.300723 1.646549197 0.130672 -771.944 3.790479078 0.355032023 10.67644278 8.7E-07 2.999418 Variable Cost per Rental Day Fixed Cost 3.79 2185.47 Regression Line : Y=a+BX Y=Total Cost , a = Fixed Cost (Interecept), B = Variable cost per unit , X= Production Units -valotal cosieression