Question 7 (1 point)

Consider the production cost information for Mama Italiano Sauce given below:

Mama Italiano 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 selling 250,000 jars of sauce annually.The jars of sauce sell for $4 per jar.The company is considering lowering the price to $3.60 per jar.Suppose this action will increase sales to 312,000 jars of sauce.What is the incremental revenue associated with the price reduction of sauce?