Question
Consider the production cost information for Prego given below: Prego Production Cost Budget April 2010 Production - Jars of sauce 20,000 Ingredient cost (variable) $16,000
Consider the production cost information for Prego given below:
| Prego | |
| Production Cost Budget | |
| April 2010 | |
| 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 selling 250,000 jars of sauce annually. 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 to 300,000 jars of sauce. What is the incremental revenue associated with the price reduction of sauce?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started