Question
Consider the production cost information for Mama Italiano Sauce given below: Mana Italiano Sauce Production Cost Budget April 2008 Productions Jars of sauce 20,000 Ingredient
Consider the production cost information for Mama Italiano Sauce given below:
Mana Italiano Sauce
Production Cost
Budget
April 2008
Productions 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 (fixed) $1,000
Total $36,000
The company is currently producing and selling 250,000 jars of sauce annually. The jars sauce sell for $4 per jar. The company is considering lowering the price to $3.60 per jar. Suppose this action will increase sales to 303,000 jars of sauce. What is the incremental revenue associated with the price reduction of sauce?
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Microeconomics
Authors: Glenn Hubbard, Anthony O'Brien
7th Edition
0134737504, 978-0134737508
