What is the incremental costs associated with producing

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Reference no: EM13261106

Consider the production cost information for Meatball Sauce given below:

Meatball Sauce
Production Cost Budget
April 2010
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 lowering the price to $3.70 per jar. Suppose this action will increase sales to 300,000 jars of sauce. What is the incremental costs associated with producing an extra 72,500 jars of sauce?

Reference no: EM13261106

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