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Find what incremental revenue associated with price

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Reference no: EM132573395

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

Mama Italiano 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

Question 1: 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 $3.65 per jar. Suppose this action will increase sales to 304,500 jars of sauce. What is the incremental revenue associated with the price reduction of sauce? Round to two decimal places.

Reference no: EM132573395

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