Answer E6-42B

E6-41B Forecast costs at different volumes (Learning Objectives 1 & 2) Whitman Drycleaners has the capacity to clean up to 6,000 garments per month. Requirements 1. Complete the following schedule for the three volumes shown. 3,000 Garments 4,500 Garments $3,375 Total variable costs Total fixed costs Total operating costs Variable cost per garment Fixed cost per garment $2.40 Average cost per garment 2. Why does the average cost per garment change? 3. The owner, Ellen Whitman, uses the average cost per unit at full capacity to predict total costs at a volume of 3,000 garments. Would she overestimate or underestimate total costs? By how much? E6-42B Prepare income statement in two formats (Learning Objective 6) Refer to the Whitman Drycleaners in E6-41B. Assume that Whitman charges customers $9 per garment for dry cleaning. Prepare Whitman's projected income statement if 4,220 garments are cleaned in March. First, prepare the income statement using the traditional format; then prepare Whitman's contribution margin income statement. 6,000 Garments