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 7,000 units per month. Per-unit costs at two different activity levels for each cost type are presented below.
Type A Type B Type C Total
5,000 units $ 19 $ 54 $ 19 $ 92
6,500 units 19 36 18 73
If Shum produces 7,000 units, the total cost would be:
Multiple Choice
$540,000.
$700,000.
$530,000.
$875,000.
None of the answers is correct.