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What is incremental cost associated with producing an extra

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Reference no: EM132990807

The production cost information for Carla Vista's Salsa is as follows:

Carla Vista's Salsa

Production Costs

April 2020

Production 30,000 Jars of Salsa

Ingredient cost (variable)$ 27,000

Labor cost (variable)14,400

Rent (fixed)4,300

Depreciation (fixed)6,200

Other (fixed)1,900

Total$ 53,800

The company is currently producing and selling 420,000 jars of salsa annually. The jars sell for $ 6.00 each. The company is considering lowering the price to $ 5.50. Suppose this action will increase sales to 480,000 jars.

Problem 1: What is the incremental cost associated with producing an extra 60,000jars of salsa?

Reference no: EM132990807

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