70.2K

Verified Solution

Link Copied!

Pillar Drycleaners has capacity to clean up to 6,000 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, Damien Pillar, erroneously uses the average cost per unit at full capacity to predict total costs at a volume of 3,000 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.) 3,000 4,500 6,000 Garments Garments Garments Total variable costs $ 2,250 Total fixed costs Total operating costs $ 2.40 Variable cost per garment Fixed cost per garment 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 fixed component of the dry cleaner's costs. The fixed cost per unit decreases as volume increases", while the variable cost per unit remains constant Requirement 3. Suppose the owner, Donald Pound, 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? He would his costs by

Answer & Explanation Solved by verified expert

See Answer