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 2,800 3,000 3,700 5,100 5,500 5,500 Fixed cost per month Variable cost per rental return 4,700 4,100 2,200 2,900 Car Wash Costs $ 11, 200 $ 13,200 $ 12,000 $ 14,600 $ 16,400 $ 23,700 $ 22,400 $ 22,700 $ 23,000 $ 21,700 $ 10,900 $ 14,900 . Using least-squares regression, estimate the variable cost per rental return and the monthly fixed cost incurred to wash cars. (Ro ixed cost to the nearest whole dollar amount and the Variable cost per unit to 2 decimal places.)

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
icon
Concept explainers
Topic Video
Question

Denger 

Required information
[The following information applies to the questions displayed below.]
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
103
June
July
August
September
October
November
December
Rental
Returns
2,400
2,500
2,800
Fixed cost per month
Variable cost per rental return
3,000
3,700
100
5,100
17200
5,500
5,500
4,700
4,100
2,200
2,900
Car Wash Costs.
$ 11, 200
$ 13,200
$ 12,000
$ 14,600
$ 16,400
$ 23,700
$ 22,400
$ 22,700
$ 23,000
$ 21,700
$ 10,900
$ 14,900
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.)
Transcribed Image Text:Required information [The following information applies to the questions displayed below.] 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 103 June July August September October November December Rental Returns 2,400 2,500 2,800 Fixed cost per month Variable cost per rental return 3,000 3,700 100 5,100 17200 5,500 5,500 4,700 4,100 2,200 2,900 Car Wash Costs. $ 11, 200 $ 13,200 $ 12,000 $ 14,600 $ 16,400 $ 23,700 $ 22,400 $ 22,700 $ 23,000 $ 21,700 $ 10,900 $ 14,900 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.)
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 4 steps with 2 images

Blurred answer
Knowledge Booster
Costing Systems
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education