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Problem - 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:
Month Rental
Returns Car Wash
Costs
January 2,380 $10,825
February 2,421 $11,865
March 2,586 $11,332
April 2,725 $12,422
May 2,968 $13,850
June 3,281 $14,419
July 3,353 $14,935
August 3,489 $15,738
September 3,057 $13,563
October 2,876 $11,889
November 2,735 $12,683
December 2,983 $13,796
Required: Using least-squares regression, estimate the variable cost elements of monthly car wash costs.
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