# 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. 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.