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Part $1$

Rollins MailboxRollins$$Mailbox

produces decorative mailboxes. The$$ company's average cost per unit is

$ $23\mathrm{.}43$$$23\mathrm{.}43$

when it produces

$1$ comma $4001,400$

mailboxes.

$1.$

What is the total cost of producing

$1$ comma $4001,400$

$$mailboxes$?$

$2.$

If

$ $20$ comma $202$$$20,202$

of the total costs are$$ fixed, what is the variable cost of producing each$$ mailbox?

$3.$

Write

Rollins MailboxRollins$$Mailbox$\text{'}$s

cost equation.

$4.$

If the plant manager uses the average cost per unit to predict total$$ costs, what would the forecast be for

$1$ comma $5001,500$

$$mailboxes$?$

$5.$

If the plant manager uses the cost equation to predict total$$ costs, what would the forecast be for

$1$ comma $5001,500$

$$mailboxes$?$

$6.$

What is the dollar difference between your answers to questions $4$ and$5?$ Which approach to forecasting costs is$$ appropriate? Why?