Davis Stores sells clothing in 15 stores located around the southwestern United States. The managers at Davis are considering expanding by opening new stores and are interested in estimating costs in potential new locations. They believe that costs are driven in large part by store volume measured by revenue. The following data were collected from last year’s operations (revenues and costs in thousands of dollars).



Store Revenues Costs
101 $4,140 $4,274
102 2,267 2,974
103 5,798 5,241
104 4,062 4,098
105 2,974 3,796
106 4,103 3,459
107 6,934 5,089
108 1,839 2,574
109 5,616 4,848
110 3,348 3,079
111 3,966 4,279
112 4,790 3,280
113 3,592 2,676
114 4,977 4,735
115 2,324 3,046
Simple regression results from the data of Davis Stores are as follows.




Equation:
Store costs = $1,693.5 + (Revenue × 52.8%)
Statistical data
Correlation coefficient 0.838
R2 0.702




Required:

a. Estimate store costs for a store with revenue of $2.9 million.

b. What percentage of the variation in store costs is explained by the independent variable?