Question

Pierce Drycleaners has capacity to clean up to 7,500 garments per month. Requirements 1. Complete the...

Pierce Drycleaners has capacity to clean up to

7,500

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

Pierce​,

erroneously uses the average cost per unit at full capacity to predict total costs at a volume of

4,500

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.)

4,500

6,000

7,500

Garments

Garments

Garments

Total variable costs

$5,100

Total fixed costs

Total operating costs

Variable cost per garment

Fixed cost per garment

$2.10

Average cost per garment

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