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 sauceThe 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 51,500 jars of sauce?
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