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# EZ Rental Car offers rental cars in an off-airport location near a major tourist destination in Florida. Management would like to better understand...

This question was answered on Dec 09, 2011. View the Answer
EZ Rental Car offers rental cars in an off-airport location near a major tourist destination in Florida. 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 car wash
returns costs
January 2,310 \$ 10,113
February 2,453 \$ 12,691
March 2,641 \$ 10,905
April 2,874 \$ 12,949
May 3,540 \$ 15,334
June 4,861 \$ 21,455
July 5,432 \$ 21,270
August 5,268 \$ 19,930
September 4,628 \$ 21,860
October 3,720 \$ 18,383
November 2,106 \$ 9,830
December 2,495 \$ 11,081

Required:
Using least-squares regression, estimate the fixed cost and variable cost elements of monthly car wash costs. (Round the "Variable cost per unit" to 2 decimal places and "Fixed cost" to the nearest dollar amount. Omit the "\$" sign in your response.)
What is Fixed cost \$
What is Variable cost per unit \$

2. One of Varic Company’s products goes through a glazing process. The company has observed glazing costs as follows over the last six weeks:

Week Units
Produced Total
Glazing Cost
1 8 \$ 270
2 5 \$ 200
3 10 \$ 310
4 4 \$ 190
5 6 \$ 240
6 9 \$ 290

For planning purposes, the company’s management wants to know the amount of variable glazing cost per unit and the total fixed glazing cost per week.

Required:
Using the least-squares regression method, estimate the variable and fixed elements of the glazing cost. (Round your answers to 2 decimal places. Omit the "\$" sign in your response.)

What is Fixed cost \$
What is Variable cost per unit \$
Express the cost data in (1) above in the form Y = a + bX. (Round your answers to 2 decimal places. Omit the "\$" sign in your response.)
Y = ? \$ + ? \$ X
If the company processes seven units next week, what would be the expected total glazing cost? (Round your intermediate and final answers to 2 decimal places. Omit the "\$" sign in your response.)
What isTotal expected cost \$
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## This question was asked on Dec 09, 2011 and answered on Dec 09, 2011.

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