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 compiled:
Month | Rental Returns | Car Wash Costs | |||
January | 2,400 | $ | 11,400 | ||
February | 2,500 | $ | 13,300 | ||
March | 2,800 | $ | 12,200 | ||
April | 3,100 | $ | 14,900 | ||
May | 3,700 | $ | 16,600 | ||
June | 5,100 | $ | 24,100 | ||
July | 5,600 | $ | 22,600 | ||
August | 5,600 | $ | 23,200 | ||
September | 4,800 | $ | 23,200 | ||
October | 4,100 | $ | 22,300 | ||
November | 2,200 | $ | 11,100 | ||
December | 3,000 | $ | 15,600 | ||
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:
Month | Rental Returns(X) | Total Cost(Y)(in $) | Square of X | X*Y(in $) |
Jan | 2,400 | 11,400 | 57,60,000 | 2,73,60,000 |
Feb | 2,500 | 13,300 | 62,50,000 | 3,32,50,000 |
Mar | 2,800 | 12,200 | 78,40,000 | 3,41,60,000 |
Apr | 3,100 | 14,900 | 96,10,000 | 4,61,90,000 |
May | 3,700 | 16,600 | 1,36,90,000 | 6,14,20,000 |
Jun | 5,100 | 24,100 | 2,60,10,000 | 12,29,10,000 |
Jul | 5,600 | 22,600 | 3,13,60,000 | 12,65,60,000 |
Aug | 5,600 | 23,200 | 3,13,60,000 | 12,99,20,000 |
Sep | 4,800 | 23,200 | 2,30,40,000 | 11,13,60,000 |
Oct | 4,100 | 22,300 | 1,68,10,000 | 9,14,30,000 |
Nov | 2,200 | 11,100 | 48,40,000 | 2,44,20,000 |
Dec | 3,000 | 15,600 | 90,00,000 | 4,68,00,000 |
Total | 44,900 | 2,10,500 | 18,55,70,000 | 85,57,80,000 |
Unit Variable Cost (b) = nΣxy − (Σx)(Σy) /nΣx^2 − (Σx)^2 | Total Fixed Cost (a) = Σy − bΣx / n |
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So here n =12 ,Σx =44.900, Σy =210,500, Σx^2=18,55,70,000 ,Σxy =85,57,80,000 | ||||
Variable cost per unit(b) =12*85,57,80,000 - (44,900*210,500) / 12*18,55,70,000 - 44,900^2 | ||||
Variable cost per unit(b) =10,26,93,60,000 - 9,45,14,40,000 / 2,03,18,40,000 - 2,01,60,10,000 | ||||
Variable cost per unit(b) =81,79,10,000 / 21,08,30,000 =$3.88 | ||||
Total Fixed cost =210,500 - ($3.88*44,900) / 12 | ||||
Total Fixed cost =(210,500 - 174,212) / 12 | ||||
Total Fixed cost =$36,288 /12 =$3,024 | ||||
The cost volume formula is: | ||||
y =$3,024 + $3.88X | ||||
Required information [The following information applies to the questions displayed below.] Bargain Rental Car offers rental...
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...
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...
Check my work 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...
[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...
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...
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...
Required information The following information applies to the questions displayed belowj 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...
[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...
i ne tollowing intormation 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...
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...