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principles of managerial accounting richardson corporation plans to

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Principles of Managerial Accounting

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?

A. Calculate total estimated costs for next year.

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

During 2012, Preferred produced 5,000 units out of which 4,600 units were sold for $30 each.

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.

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