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 2,400 $ 11,100 February 2,500 $ 13,200 March 2,700 $ 11,900 April 3,000 $ 14,400 May 3,600 $ 16,300 June 5,100 $ 23,500 July 5,500 $ 22,300 August 5,500 $ 22,400 September 4,700 $ 22,900 October 4,000 $ 21,400 November 2,200 $ 10,800 December 2,800 $ 14,600 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

Answer- Months XY January 2400 $11100 5760000 26640000 february | 2500 $13200 6250000 33000000 March 2700 April $11900 $ 14400 $ 16306 7290000 32130000 900000043200000 3000 May 3600 12960000 58680000 June 5100 $23500 26010000 119850000 July 5500 $ 29 300 30250000 122650000 $ 2240030250000 12 3200000 August 5500 4700 $22900 22090000 107630000 September October 4000 $ 21400 1600000085600000 November 2200 $10800 4840000 23760000 December 2800 $146007840000 40880000 Total 44000204800174040000 817220000 we know that least square regression method. har an equation to indicate te Linen a total mixed cost castotal faxed i. e, Y=a+b6 : bvariable costenlos X -The level of activity

To deforming variable cost variable cost /unit - (n{Exy - Ex x xy) 1. (nex? - (Exi?) (la x 8172200001 - 44000 x 204800) ( 12 x 174040000 - (44000)? | 9806640000 - 2088480000 - 9011200000 1936000006 795440000 15.2479994 -$5.21 .-. Variable cost/unit = $5.21

Fired costlaenit Ey - variable cost funi't xex 204860 - 5.21 x44000 12 204800 - 229240 2 204800 - 19103.3 = 185696.66 fixed cost-fanit = $1856977