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:

Required:

Using least-squares regression, estimate the fixed cost and variable cost elements of monthly car wash costs. The fixed cost element should be estimated to the nearest dollar and the variable cost element to the nearest cent.

Transcribed Image Text:

Rental Car Wash Month Returns Costs $10,825 Jamuary 2,380 $11,865 February 2,421 $11,332 March 2,586 $12,422 April 2,725 May $13,850 2,968 June 3,281 $14,419 July $14,935 3,353 $15,738 August 3,489 September 3,057 $13,563 $11,889 October 2,876 November $12,683 2,735 $13,796 December 2,983