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What is the incremental revenue associated with the price

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Reference no: EM132515073

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 lowering the price to $3.70 per jar. Suppose this action will increase sales to 306,000 jars of sauce.

Question 1 : What is the incremental revenue associated with the price reduction of sauce?

Reference no: EM132515073

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