What is the incremental costs associated with producing

timer Asked: Oct 31st, 2015

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


Ingredient cost (variable)


Labor cost (variable)


Rent (fixed)


Depreciation (fixed)


Other (fixed)




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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