Fixed and Variable Cost Behavior
Killy's Baskets has the following current-year costs:
VC $6 per unit
Killy and a key supplier have entered into an arrangement that will result in a per-unit decrease in Killy's variable cost of $0.50 next year. Rental space will also be reduced, thereby decreasing fixed costs by 10 percent.
Given the new cost equation, determine estimated total costs if production remains at 12,000 units.
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