Pierce Drycleaners has capacity to clean up to 7,500 garments per month. Require

Question

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? Clear Al 3. Sugpose the owner, Darrn Plerce, eronecusly uses the average cost per uni at ful apc to tolal costs at a volume of 4,500n. Would he overesimateor underessimate his total cos? 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 Total fixed costs Total operating costs 5,700 Variable cost per garment Fixed cost per garment Average cost per garment 2.10

Explanation / Answer

Complete the schedule :

4500 Garments 6000 Garments 7500 Garments Total variance cost 4275 5700 7125 Total fixed cost 12600 12600 12600 Total operating costs 16875 18300 19725 Variable cost per garment 0.95 0.95 0.95 Fixed cost per garment 2.80 2.10 1.68 Average cost per garment 3.75 3.05 2.63

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