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Consider the production cost information for Mama Italiano Sauce given below: Production: 20,000 Ingredient cost (variable): 16,000 Labor cost (variable): 9,000 Rent (fixed): 4,000 Depreciation
Consider the production cost information for Mama Italiano Sauce given below:
Production: 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 selling jars of sauce. Te 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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