Sanchez Sweets is in the process of preparing a production cost budget for May. Actual costs in April for production of 3,500 batches of cookies were: Ingredients cost $ 7,200 Rent 1,100 Labor cost 3,300 Depreciation 900 Other fixed costs 700 Total $13.200 Ingredients cost and Labor cost are considered variable. The company is currently producing and selling 85,000 batches of cookies annually with each batch sold for $8.00. The company is considering lowering the price to $7.50 per batch for which management estimates this will increase sales to 91,000 batches. Ingredients and labor are the only variable costs. What is the incremental cost associated with producing an extra 6,000 batches of cookies? $18,000 $9,000 $15,000 $12,000 $7,500
Sanchez Sweets is in the process of preparing a production cost budget for May. Actual costs in April for production of 3,500 batches of cookies were:
Ingredients cost $ 7,200
Rent 1,100
Labor cost 3,300
Other fixed costs 700
Total $13.200
Ingredients cost and Labor cost are considered variable. The company is currently producing and selling 85,000 batches of cookies annually with each batch sold for $8.00. The company is considering lowering the price to $7.50 per batch for which management estimates this will increase sales to 91,000 batches. Ingredients and labor are the only variable costs.
What is the incremental cost associated with producing an extra 6,000 batches of cookies?
|
$18,000 |
||
|
$9,000 |
||
|
$15,000 |
||
|
$12,000 |
||
|
$7,500 |
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
