2. Consider the production cost information for tomato sauce given below:

Production of sauce pots 25,000 Ingredient cost (variable) $20,000 Labor cost (variable) 12,000 Rent (fixed) 5,000 Depreciation (fixed) 6,000 Others (fixed) 1,000 Total $44,000

The company currently produces and sells 325,000 jars of sauce a year. The jars sell for $5.00 each. The company is considering lowering the price to $4.50. Suppose this action will increase sales to $365,000 jars. a) What is the incremental cost associated with producing an extra 40,000 jars of sauce? b) What is the incremental revenue associated with the price reduction of $0.50 per bottle?