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The production cost information for Santiagos Salsa is as follows: Santiagos Salsa Production Costs April 2014 25,000 Production Jars of Salsa Ingredient cost (variable) $21,000

The production cost information for Santiagos Salsa is as follows:

Santiagos Salsa Production Costs April 2014
25,000
Production Jars of Salsa
Ingredient cost (variable) $21,000
Labor cost (variable) 13,250
Rent (fixed) 4,400
Depreciation (fixed) 5,900
Other (fixed) 1,500
Total $46,050

The company is currently producing and selling 350,000 jars of salsa annually. The jars sell for $5.00 each. The company is considering lowering the price to $4.60. Suppose this action will increase sales to 425,000 jars.

What is the incremental cost associated with producing an extra 75,000 jars of salsa?

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