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To Calculate the Unit Cost of the Neoprene Stockingfoot Waders

Question 147

Essay

To calculate the unit cost of the Neoprene stockingfoot waders he sells, Gary Guinn added up all his costs and divided by the number of waders he sold during the year. He then used this unit cost to estimate total costs for the coming year. Explain why Gary’s method is not useful in predicting total costs for the coming year.

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Gary did not consider what portion of hi...

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