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 of4,500 garments. Wouldhe overestimate or underestimatehis 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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