Question
Consider the production cost information for Mama Italian Sauce given below: Mama Italian Sauce Production Cost Budget April 2008 Production - Jars of sauce...20,000 Ingredient
Consider the production cost information for Mama Italian Sauce given below:
Mama Italian Sauce
Production Cost Budget
April 2008
Production - Jars of sauce……………………………...20,000
Ingredient cost (variable) …………………………….$16,000
Labor cost (variable) …………………………………….9,000
Rent (fixed) ……………………………………………..4,000
Depreciation (fixed) …………………………………….6,000
Other (fixed) ……………………………………………1,000
Total…………………………………………………..$36,000
The company is currently producing and selling jars of sauce the jars of sauce sell for $4 per jar. The company is considering lowering the price to $3.70 per jar. Suppose this action will increase sales. What are the incremental costs associated with producing an extra 63,500 jars of sauce?
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Microeconomics
Authors: Austan Goolsbee, Steven Levitt, Chad Syverson
1st Edition
978-1464146978, 1464146977
