Variable costs change per unit of output, and fixed costs are the same (or “fixed”) regardless of how many units are produced. If total costs were expressed as a function of units in the form of a linear equation in y=my+b form, the fixed costs would be the “b” (y-intercept) term, and the variable costs would be the “m” (slope) term.
Advertising costs can be calculated as follows:
$15,000*1.2 (reflecting a 20% increase) = $18,000.
Next, additional fixed costs are $50,000. This yields a total fixed cost of $18,000 (advertising) + $50,000 (other) = $68,000.
Now, the total costs are: $10 (per unit)* 30,000 (units) + $68,000 = $368,000.
Thursday, February 6, 2014
Richardson Corporation plans to increase its advertising budget by 20% next year. The company currently spends $15,000 on advertising costs. In addition to advertising, Richardson spends $50,000 per year for other fixed costs and $10 per unit for variable costs. If Richardson anticipates producing 30,000 units next year, what will be next year's total costs? Calculate total estimated costs for next year.
Subscribe to:
Post Comments (Atom)
What is the theme of the chapter Lead?
Primo Levi's complex probing of the Holocaust, including his survival of Auschwitz and pre- and post-war life, is organized around indiv...
-
The statement "Development policy needs to be about poor people, not just poor countries," carries a lot of baggage. Let's dis...
-
"Mistaken Identity" is an amusing anecdote recounted by the famous author Mark Twain about an experience he once had while traveli...
-
Primo Levi's complex probing of the Holocaust, including his survival of Auschwitz and pre- and post-war life, is organized around indiv...
-
De Gouges's Declaration of the Rights of Woman was enormously influential. We can see its influences on early English feminist Mary Woll...
-
As if Hamlet were not obsessed enough with death, his uncovering of the skull of Yorick, the court jester from his youth, really sets him of...
-
In both "Volar" and "A Wall of Fire Rising," the characters are impacted by their environments, and this is indeed refle...
No comments:
Post a Comment