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ctives 1& 2) nsworth Drycleaners has capacity to clean up to 7,500 garments per month oj Requirements 1. Complete the following schedule for the three volumes shown. 4,500 Garments 6,000 Garments 7,500 Garments al variable costs $4,200 al fixed costs al operating costs able cost per garment d cost per garment age cost per garment $2.40 - Why does the average cost per garment change? Suppose the owner, Dustin Farnsworth, erroneously uses the average cost per unit a Tull capacity to predict total costs at a volume of 4,500 garments. Would he overest mate or underestimate his total costs? By how much?

ctives 1& 2) nsworth Drycleaners has capacity to clean up to 7,500 garments per month oj Requirements 1. Complete the following schedule for the three volumes shown. 4,500 Garments 6,000 Garments 7,500 Garments al variable costs $4,200 al fixed costs al operating costs able cost per garment d cost per garment age cost per garment $2.40 - Why does the average cost per garment change? Suppose the owner, Dustin Farnsworth, erroneously uses the average cost per unit a Tull capacity to predict total costs at a volume of 4,500 garments. Would he overest mate or underestimate his total costs? By how much?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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**E6-20A Forecast Costs at Different Volumes** *Learning Objectives 1 & 2* Farnsworth Drycleaners has the capacity to clean up to 7,500 garments per month. **Requirements:** 1. Complete the following schedule for the three volumes shown. | | 4,500 Garments | 6,000 Garments | 7,500 Garments | |---------------------|----------------|----------------|----------------| | Total variable costs| | | | | Total fixed costs | | $4,200 | | | Total operating costs| | | | | Variable cost per garment| | | | | Fixed cost per garment | | $2.40 | | | Average cost per garment| | | | 2. Why does the average cost per garment change? 3. Suppose the owner, Dustin Farnsworth, erroneously uses the average cost per unit at full capacity to predict total costs at a volume of 4,500 garments. Would he overestimate or underestimate his total costs? By how much?
Transcribed Image Text:**E6-20A Forecast Costs at Different Volumes** *Learning Objectives 1 & 2* Farnsworth Drycleaners has the capacity to clean up to 7,500 garments per month. **Requirements:** 1. Complete the following schedule for the three volumes shown. | | 4,500 Garments | 6,000 Garments | 7,500 Garments | |---------------------|----------------|----------------|----------------| | Total variable costs| | | | | Total fixed costs | | $4,200 | | | Total operating costs| | | | | Variable cost per garment| | | | | Fixed cost per garment | | $2.40 | | | Average cost per garment| | | | 2. Why does the average cost per garment change? 3. Suppose the owner, Dustin Farnsworth, erroneously uses the average cost per unit at full capacity to predict total costs at a volume of 4,500 garments. Would he overestimate or underestimate his total costs? By how much?
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