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 type are presented below. The cost formula that expresses the behavior of Shum's total cost is:
A)Y = $0 + $17X.
B)Y = $20,000 + $13X.
C)Y = $40,000 + $9X.
D)Y = $45,000 + $4X.
E)Y = $60,000 + $5X.

Question

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 type are presented below.  The cost formula that expresses the behavior of Shum's total cost is:
A)Y = $0 + $17X. 
B)Y = $20,000 + $13X. 
C)Y = $40,000 + $9X. 
D)Y = $45,000 + $4X. 
E)Y = $60,000 + $5X.

Quizplus · Accepted Answer

The Answer of 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 type are presented below.  The cost formula that expresses the behavior of Shum's total cost is:
A)Y = $0 + $17X. 
B)Y = $20,000 + $13X. 
C)Y = $40,000 + $9X. 
D)Y = $45,000 + $4X. 
E)Y = $60,000 + $5X.

Shum Manufacturing, Which Uses the High-Low Method, Makes a Product