What is incremental revenue associated with price reduction

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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

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 lowing the price to $3.70. Suppose this action will increase sales to 303,000 jars of sauce. What is the incremental revenue associated with the price reduction of sauce?

Reference no: EM131296410

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