1) Zen Oil is in the process of preparing a production cost budget for May.The actual costs in April were:

Zen Oil

Production Cost Budget

April 2008

Production - Cans of oil 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

Using this information, produce a budget for May stating the total amount for the May budget.Assume the budget will increase to 23,000 cans of oil reflecting anticipated sales increase related to a new marketing campaign. Round to two decimal places.

2) Consider the production cost information for Zen Oil given below:

Zen Oil

Production Cost Budget

April 2008

Production - Cans of oil 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

Zen Oil is currently producing and sellingcans of oil.The cans of oil sell for $4 per can.The organization is considering lowering the price to $3.70 per can.Suppose this action will increase sales.What is the incremental costs associated with producing an extra 62,000 cans of oil? Round to two decimal places.

3) Consider the production cost information for Zen Oil given below:

Zen Oil

Production Cost Budget

April 2008

Production - Cans of oil 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

Zen Oil is currently producing and selling 250,000 cans of oil annually.The cans of oil sell for $4 per can.The organization is considering lowering the price to $3.60 per can.Suppose this action will increase sales to 306,000 cans of oil.What is the incremental revenue associated with the price reduction of oil? Round to two decimal places.