What are the incremental costs?

SoccerBoss
Category:
Business & Finance
Price: $5 USD

Question description

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

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

The company is currently producing and selling jars of sauce  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.  What is the incremental costs associated with producing an extra 67,250 jars of sauce?


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(Top Tutor) Daniel C.
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School: UT Austin
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