Question
Consider the production cost information for Mama Italiano Sauce given below: Mama Italian Sauce Production Cost Budget April 2008 Production - Jars of sauce 20,000
Consider the production cost information for Mama Italiano 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 sellingjars 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 is the incremental costs associated with producing an extra 69,500 jars of sauce?
Round to two decimal places.
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