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 |
2,500 |
|
$ |
11,900 |
|
| February |
2,500 |
|
$ |
13,600 |
|
| March |
2,800 |
|
$ |
12,700 |
|
| April |
3,100 |
|
$ |
15,600 |
|
| May |
3,700 |
|
$ |
17,100 |
|
| June |
5,200 |
|
$ |
25,100 |
|
| July |
5,600 |
|
$ |
23,100 |
|
| August |
5,700 |
|
$ |
24,400 |
|
| September |
4,800 |
|
$ |
23,700 |
|
| October |
4,500 |
|
$ |
23,800 |
|
| November |
2,300 |
|
$ |
11,600 |
|
| December |
3,100 |
|
$ |
17,400 |
|
|
Exercise 5A-2 Part 2
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 |
|
