What is the incremental revenue associated with the price reduction of sauce

Business & Finance
Price: $5 USD

Question description

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

Mama Italiano Sauce

Production Cost Budget

April 2008

Production - Jars of sauce


Ingredient cost (variable)


Labor cost (variable)


Rent (fixed)


Depreciation (fixed)


Other (fixed)




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 313,500 jars of sauce.  What is the incremental revenue associated with the price reduction of sauce?

Tutor Answer

(Top Tutor) Daniel C.
School: UT Austin
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