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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 lowering the price to $3.60 per jar. Suppose this action will increase sales to 316,500 jars of sauce. What is the incremental revenue associated with the price reduction of sauce?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92096779

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