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 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 Rental Returns Car Wash Costs Month January February March April May June July August September October November December 2,400 2,500 2,800 3,100 3,700 5,100 5,600 5,600 4,800 4,100 2,200 3,000 11,400 13,300 12,200 s 14,900 16,600 s 24,100 22,600 s 23,200 s 23,200 22,300 11,100 15,600 2. Using least-squares regression, estimate the variable cost per rental return and the monthly fixed cost incurred to wash cars. What is the R" rounded to the nearest whole percentage? (Round Fixed cost to the nearest whole dollar amount and the Variable cost per unit to 2 decimal places.) 2 Fixed cost per month Variable cost per rental returrn R-square

Explanation / Answer

Using least square regression,

Fixed cost per month -343.86 Variable cost per rental return 0.23 R-square 0.9

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