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 68,750 jars of sauce?
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Essentials of Investments
Authors: Zvi Bodie, Alex Kane, Alan J. Marcus
10th edition
77835425, 978-0077835422
