Reference no: EM132507385

Shum Manufacturing, which uses the high-low method, makes a product called Kwan. The company incurs three different cost types (A, B, and C) and has a relevant range of operation between 2,500 units and 10,000 units per month. Per-unit costs at two different activity levels for each cost types are presented below.

                                   Types A          Type B            Type C            Total

5,000 units                  $5                  $12            $5                $22

7,500units                    5                      8            4                  17

Question 1: If Shum produces 10,000 units, the total cost would be:

Choices are:

Option 1: $71,000.

Option 2: $42,000.

Option 3: $145,000.

Option 4: $77,000.

Option 5: None of the answers is correct.