Shingle Enterprises is considering manufacturing a new product. It projects the

Question

Shingle Enterprises is considering manufacturing a new product. It projects the cost of direct materials and rent for a range of output as shown below Output Rent Direct in Units Expense Materials 1,000 5,585 4,468 5,585 8,936 8,936 8,936 8,936 8,936 8,936 11,170 11,170 11,170 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 11,000 8,042 7,500 10,000 12,500 15,000 17,500 20,000 32,728 39,095 49,148 Determine the relevant range of activity for this product The relevant range of activity for this product units

Explanation / Answer

The relevant range of activity for this product is 3000-8000 units 2 Variable costs per unit=(20000-7500)/(8000-3000)= $2.50 3 Fixed cost = $8936

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