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Check mode : This shows what is correct or incorrect for the work you have completed so far. It does not indicat my work Bargain Rental Car offers rental cars in an off-airport location near a major tourist de would like to better understand the variable and fixed porti ons of it car washing costs. The company operates its own car mer. Management believes that the variable portion of its car washing costs relates to the number of rental returns. wash facility in which each rental car that is returned is thoroughly cleaned before being released for rental to another of 2 Accordingly, the following data have been compiled: Rental Returns Car Wash Costs January February March April May June July August September October November December 2,400 2,500 2,700 3,000 3,600 5,000 5,500 5,400 4,700 3,900 2,200 2,700 10,700 $ 13,000 11,500 13,800 $ 15,900 22,700 21,900 $ 21,400 $ 22,500 $ 20,200 10,400 13,200 2. Using least-squares regression, estimate the variable cost per rental return and the monthly fixed cost incurred to wash cars. (Rour 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. Fixed cost per month Variable cost per rental return 2,185 s 3.73

Explanation / Answer

Rental Returns Car wash costs x y x^2 (x saquare) xy                                            2,400                  10,700            5,760,000 2400^2              25,680,000 2400*10700                                          2,500                  13,000            6,250,000              32,500,000                                          2,700                  11,500            7,290,000              31,050,000                                          3,000                  13,800            9,000,000              41,400,000                                          3,600                  15,900          12,960,000              57,240,000                                          5,000                  22,700          25,000,000           113,500,000                                          5,500                  21,900          30,250,000           120,450,000                                          5,400                  21,400          29,160,000           115,560,000                                          4,700                  22,500          22,090,000           105,750,000                                          3,900                  20,200          15,210,000              78,780,000                                          2,200                  10,400            4,840,000              22,880,000                                          2,700                  13,200            7,290,000              35,640,000 Total                                          43,600                197,200        175,100,000           780,430,000 Now we have   n(Numbers of cases)=                           12 ?x                  43,600 ?y                197,200 ?x^2        175,100,000 ?xy        780,430,000 Average varaible cost per unit=(n*?xy-?x*?y)/(n*?x^2-(?x)^2)                       3.83 =(12*780430000-43600*197200)/(12*175100000-(43600)^2) Fixed cost =(?y-average variable cost per unit *?x)/n                     2,512 =(197200-3.8316 *43600)/12

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