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

question 18

Multiple Choice

Yang Manufacturing, which uses the high-low method, makes a product called Yin. 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. $\begin{array}{|l|l|l|l|l|l|l|l|}\hline&\text { Type A}&&\text { Type B}&&\text { Type C}&&\text { Total } \\\hline 5,000 \text { units } & \$ 4 & & \$ 9 && \$ 4 & & \$ 17 \\\hline 7.500 \text { units } & \$ 4 && \$ 6 & &\$ 3 & & \$ 13 \\\hline\end{array}$ The cost formula that expresses the behaviour of Yang'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.

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