Question 5: Cost structure estimation activity volume total costs in units month Oct Nov Dec 85 75 105 $4,550 $4,750 $5,650 a) Which cost structure estimation method should we use? O account classification method O high-low method b) To identify the low and high points, we should look for O lowest/highest costs O lowest/highest activitb c) Estimate the cost structure parameters: total FC= unit VC Write down the total cost equation volume d) Predict the total costs of producing 100 units TC= e) Can we use the estimates from (c) to predict costs at volume of 5,000 units? O NO: 5,000 units is outside the relevant range (the normal range of activity is around 75-105 units). YES: Just plug in volume 5,000 in the total cost equation