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 7,000 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		$	23			$	66			$	23			$	112
	7,500	units			23				44				22				89

If Shum produces 7,000 units, the total cost would be:

Multiple Choice

• $552,500.

• $645,000.

• $646,000.

• $860,000.

• None of the answers is correct.