Pastore Drycleaners has capacity to clean up to 9,000 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, Dennis Pastore, erroneously uses the average cost per unit at full capacity to predict total costs at a volume of 6,000 garments. Would he overestimate or underestimate his total costs? By how much?

	6,000	7,500	9,000
	Garments	Garments	Garments
Total variable costs		$6,000
Total fixed costs
Total operating costs
Variable cost per garment
Fixed cost per garment		$1.80
Average cost per garment