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    Incremental Costs

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    Consider the production cost information for Mama Italiano Sauce given below:

    Mama Italian 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 300,000 jars of sauce. What are the incremental costs associated with producing an extra 58,250 jars of sauce?

    © BrainMass Inc. brainmass.com May 20, 2020, 11:31 pm ad1c9bdddf
    https://brainmass.com/economics/finance/incremental-costs-575576
    $2.19

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