Q2 A winery plans to open a new production faclity in Barossa Valley. Based on information provided by the accounting department, it estimates fixed costs of $250,000 per vear and average variable costs of AVC=810+%0.01Q where AV (C is average variable cost (in dollars) and @ is output measured in cases of output per year. (1). Estimate total cost and average total cost for the coming year at a projected volume of 4,000 cases. (10 points) (2). An increase in worker productivity because of greater experience or learning during the course of the yvear resulted in a substantial cost saving for the company. Estimate the effect of learning on average total cost if actual total cost was $522,500 at an actual volume of 5,000 cases. (20 points) Q3 A package service company offers overnight package delivery to its business cus- tomers. It has recently decided to expand its facilities to better satisfy current and pro- jected demand. Current volume totals two million packages per week at a price of $12 each, and average variable costs are constant at all output levels. Fixed costs are $3 million per week, and profit contribution averages one-third of revenues on each delivery (profit contribution=(P-AV (C)Q). After completion of the expansion project, fixed costs will double, but variable costs will decline by 25%. (1). Calculate the change in the company's weekly breakeven output level that is due to expansion. (10 points) (2). Assuming that volume remains at 2 million packages per week, calculate the change in the degree of operating leverage that is due to expansion. (10 points) (3). Again assuming that volume remains at two million packages per week, what is the effect of expansion on weekly profit? (10 points)