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

Multiple Choice

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.