Question

Required information [The following information applies to the questions displayed below.) 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 complied: Month January February March April May June July August September October November December Rental Returns 2,400 2,500 2,700 3,000 3,600 5,000 5,500 5,500 4,700 4,000 2,200 2,800 Car Wash Costs $ 11,000 $ 13, 100 $ 11,800 $ 14,300 $ 16,200 $ 23,300 $ 22,200 $ 22,200 $ 22,800 $ 21,100 $ 10,700 $ 14,200 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

	Coefficients
Intercept	2750.95
X Variable 1	3.87

Variable Cost per rental return = $3.87
Fixed Cost = $2751

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