Santiagos salsa production costs for 25000 jars ingredient, Ask an Expert

Accounting

Santiago's Salsa Production Costs for 25,000 Jars
Ingredient Cost (variable) $20,000
Labor Cost (variable) $12,000

Consider the production cost information above. The company is currently producing and selling 325,000 jars of salsa annually. The jars sell for $5.00. The company is considering lowering the price to $4.60. Suppose this action will increase sales to 375,000 jars.

Should Santiago's lower the price of salsa based on incremental analysis?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9968485

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