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.

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 in UnitsRent ExpenseDirect Materials
1,0007,1005,680
2,0007,10010,224
3,00011,3606,000
4,00011,3608,000
5,00011,36010,000
6,00011,36012,000
7,00011,36014,000
8,00011,36016,000
9,00014,20041,606
10,00014,20049,700
11,00014,20062,480

1. Determine the relevant range of activity for this product.

2. Calculate the variable cost per unit within the relevant range.

3. Indicate the fixed cost within the relevant range.

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