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 its
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:
2. Using least-squares regression, estimate the variable cost
per rental return and the monthly fixed cost incurred to wash
cars.
- Bargain Rental Car Offers Rental Cars In An Off Airport Location Near A Major Tourist Destination In California Managem 1 (341.65 KiB) Viewed 81 times
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 its 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 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 $ 10,900 $ 13,100 $ 11,700 $ 14,100 $ 16,100 $ 23,100 $ 22,100 $ 21,900 $ 22,700 $ 20,800 $ 10,600 $ 13,900 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 is complete but not entirely correct. $ 2,255 X Fixed cost per month Variable cost per rental return $ 3.79 X