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What is the incremental revenue associated with the price

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Reference no: EM132729580

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 307,500 jars of sauce. What is the incremental revenue associated with the price reduction of sauce?

Reference no: EM132729580

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