Solution-Why does the average cost per garment change

Why does the average cost per garment change

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Reference no: EM13859322

Princeton Drycleaners has capacity to clean up to 5.000 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. Dale Princeton. erroneously uses the average cost per unit at full capacity to predict total costs at a volume of 2.000 garments. Would he overestimate or underestimate his total costs? By how much?

Requirement 1. Complete the following schedule for the three volumes shown.

	2,000 Garments		3,500 Garments	5,000 Garments
Total variable costs		$ 2.100
Total fixed costs	7,000		7.000	7,000
Total operating costs			9.100
Total operating costs			9.100
Variable cost per garment
Variable cost per garment
Fixed cost per garment	3.50	$	2.00	1.40
Average cost per garment
Average cost per garment

Reference no: EM13859322

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Why does the average cost per garment change

Reference no: EM13859322

Reference no: EM13859322

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