Reference no: EM132216288

Question - 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?

Preferred Products has the following cost information available for 2012:

Direct materials	$4.00 per unit
Direct labor	$3.00 per unit
Variable manufacturing overhead	$2.00 per unit
Variable selling and administrative costs	$1.00 per unit
Fixed manufacturing overhead	$25,000
Fixed selling and administrative costs	$10,000

1) Calculate total estimated costs for next year.

2) Calculate Preferred's net operating income assuming the company uses variable costing.

3) Calculate Preferred's net operating income assuming the company uses absorption costing.