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Shum Manufacturing, which uses the high - low method for estimating cost function, makes a product called Kwan. The company incurs three different manufacturing cost

Shum Manufacturing, which uses the high-low method for estimating cost function, makes a product called Kwan. The company incurs three different manufacturing cost types (A, B, and C) and has a relevant range of operation between 4,000 units and 10,000 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 $7 $12.60 $4 $23.60
7,500 units $7 $8.40 $3 $18.40
Required:
a) Classify each of the costs (A, B, and C) as either fixed or variable or semi-variable
b) Write down a linear cost function that expresses the behavior of Shum's total manufacturing cost as a function of # of units produced.
c) If Shum produces 10,000 units, what would be the total cost of manufacturing?
d) If all fixed costs (or fixed components of costs) decrease by 10% and all variable costs (or variable components of costs) decrease by 10%, what would be the total cost of manufacturing for an activity level of production of 8,000 units?

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