60.1K

Verified Solution

Link Copied!

Pastore Dry Cleaners has capacity to clean up to 9,000 garments per month. Requirements 1. Complete the following schedule for the three volumes shown. 2. Why does the average cost per garment change? 3. Suppose the owner, Dan Pastore, erroneously uses the average cost per unit at full capacity to predict total costs at a volume of 6,000 garments. Would he overestimate or underestimate his total costs? By how much? Requirement 1. Complete the schedule below for the three volumes shown. (Round all unit costs to the nearest cent and all total costs to the nearest whole dollar.) 6,000 7,500 9,000 Garments Garments Garments $ 4,500 Total variable costs Total fixed costs Total operating costs Variable cost per garment Fixed cost per garment $ 2.40 Average cost per garment Requirement 2. Why does the average cost per garment change? The average cost per garment changes as volume changes, due to the component of the dry cleaner's costs. The cost per unit decreases as volume while the variable cost per unit Requirement 3. Suppose the owner, Dan Pastore, erroneously uses the average cost per unit at full capacity to predict total costs at a volume of 6,000 garments. Would he overestimate or underestimate his total costs? By how much? He would his costs by $

Answer & Explanation Solved by verified expert

See Answer