Quantum Company uses the high-low method to estimate the cost function. The information for 20X7 is provided below:

Hours Labor Costs Highest observation of cost driver              650            $40,000

Second highest observation of cost driver                               550           $35,000

Second lowest observation of cost driver                                 500           $34,000

Lowest observation of cost driver                                            450            $30,000

Calculate total fixed costs.

a. $7,500

b. $7,000

c. $10,000

d. $50