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What is the incremental revenue associated with the price

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Reference no: EM132938204

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

Problem 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 $3.75 per jar. Suppose this action will increase sales to 309,000 jars of sauce. What is the incremental revenue associated with the price reduction of sauce?

Reference no: EM132938204

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