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ACC - Mama Italiano Sauce

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Question;Consider the production cost information for Mama Italiano Sauce given below:Mama Italian SauceProduction Cost BudgetApril 2008Production - Jars of sauce 20,000Ingredient cost (variable) $16,000Labor cost (variable) 9,000Rent (fixed) 4,000Depreciation (fixed) 6,000Other (fixed) 1,000Total $36,000The company is currently producing and selling jars of sauce 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. What is the incremental costs associated with producing an extra 65,750 jars of sauce?

 

Paper#41342 | Written in 18-Jul-2015

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