Pillard Drycleaners has capacity to clean up to 5,500 garments per month. Requirements 1. Complete the schedule
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Question:
Pillard Drycleaners has capacity to clean up to 5,500 garments per month.
Requirements
1. | Complete the schedule below for the three volumes shown. |
2. | Why does the average cost per garment change? |
3. | Suppose the owner, Derrick Pillard, erroneously uses the average cost per unit at full capacity to predict total costs at a volume of 2,500 garments. Would he overestimate or underestimate his total costs? By how much? |
Requirement 1. Complete the following schedule for the three volumes shown. (Round all unit costs to the nearest cent and all total costs to the nearest whole dollar.)
| 2,500 | 4,000 | 5,500 |
| Garments | Garments | Garments |
Total variable costs | | $3,800 | |
Total fixed costs | | | |
Total operating costs | | | |
| | | |
Variable cost per garment | | | |
Fixed cost per garment | | $2.20 | |
Average cost per garment | | | |
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