20A Forecast costs at different volumes (Learning Objectives 1 & 2)Famsworth Drycleaners has capacity to clean up to 7,500 garments per month.Requirements1. Complete the following schedule for the three volumes shown.4,500 Garments6,000 Garments7,500 GarmentsTotal variable costs$4,200Total fixed costsTotal operating costsVariable cost per garmentFxed cost per garment$2.40Average cost per garment2. Why does the average cost per garment change?3. Suppose the owner, Dustin Farnsworth, erroneously uses the average cost per unit atfull capacity to predict total costs at a volume of 4,500 garments. Would he overesti-mate or underestimate his total costs? By how much?

solution first of all lets use the given information total variable cost for 6000 garments…

Answered: ctives 1& 2) nsworth Drycleaners has…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter3: Cost Behavior

Section: Chapter Questions

Problem 7CE

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