Question
The production cost information forSheridan's Salsa is as follows: Sheridan's Salsa Production Costs April 2020 Production 28,000 Jars of Salsa Ingredient cost (variable)$22,400 Labor cost
The production cost information forSheridan's Salsa is as follows:
Sheridan's Salsa
Production Costs
April 2020
Production 28,000
Jars of Salsa
Ingredient cost (variable)$22,400
Labor cost (variable) 11,200
Rent (fixed) 5,100
Depreciation (fixed 7,600
Other (fixed) 1,600
Total $47,900
The company is currently producing and selling364,000jars of salsa annually. The jars sell for $8.00each. The company is considering lowering the price to $7.50. Suppose this action will increase sales to420,000jars.
(a)
What is the incremental cost associated with producing an extra56,000jars of salsa?
Incremental Cost $
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