Bargain Rental Car offers rental cars in an off-airport location near a major to

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 behavior of the company's costs. One of those costs is the cost of washing cars. 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 costs of operating the car wash should be related to the number of rental returns. Accordingly, the following data have been compiled:

Month Rental Car Wash
Returns Costs

January 2,314 $19,270
February 2,354 $21,615
March 3,512 $23,489
April 3,602 $21,055
May 1,988 $20,870
June 2,435 $19,630
July 2,635 $21,560
August 2,545 $18,950
Sept 3,702 $26,542
October 2,674 $18,336
November 2,254 $25,431
December 3,245 $24,675

1. Using least-squares regression, estimate the fixed cost and variable cost elements of monthly car wash costs
a. fixed cost
b. variable cost

Explanation / Answer

least squares regression line is y=2.175x + 15755.69 a. fixed cost = $15,755.69 b. variable cost = $2.175 per rental return

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.