Princeton Drycleaners has capacity to clean up to 5,000 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, 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 howmuch?

Transcribed Image Text:

2,000 3,500 Garments Garments Garments 5,000 Total variable costs Total fixed costs Total operating costs Variable cost per garment Fixed cost per garment Average cost per garment $2,100 $200