Question 5

Mama Italiano Sauce is in the process of preparing a production cost budget for May. The actual costs in April were:

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

Using this information, prepare a budget for May stating the total amount for the May budget. Assume the budget will increase to 23,500 jars of sauce reflecting anticipated sales increase related to a new marketing campaign