Parrish Drycleaner 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 garment change?
3. Suppose the owner, Dale Parrish, erroneously uses the average cost per unit at full capacity to predict total cost at a volume of 4,500 garments. Would he overestimate or Underestimate his total cost? By how much?

Transcribed Image Text:

6,000 Garments 7,500 Garments Garments $3,600 Total variable costs Total fixed costs Total operating costs Variable cost per garment $2.10 Average cost per garment