The production cost information for Blossom's Salsa is as follows: Blossom's Salsa Production Costs April 2020 22,000 Production Jars of Salsa Ingredient cost (variable) $17,600 Labor cost (variable) 10,120 Rent (fixed) 4,900 Depreciation (fixed) 6,100 Other (fixed) 1,800 Total $40,520 The company is currently producing and selling 264,000 jars of salsa annually. The jars sell for $8.00 each. The company is considering lowering the price to $7.50. Suppose this action will increase sales to 308,000 jars. (a) What is the incremental cost associated with producing an extra 44,000 jars of salsa? Incremental Cost $
The production cost information for Blossom's Salsa is as follows: Blossom's Salsa Production Costs April 2020 22,000 Production Jars of Salsa Ingredient cost (variable) $17,600 Labor cost (variable) 10,120 Rent (fixed) 4,900 Depreciation (fixed) 6,100 Other (fixed) 1,800 Total $40,520 The company is currently producing and selling 264,000 jars of salsa annually. The jars sell for $8.00 each. The company is considering lowering the price to $7.50. Suppose this action will increase sales to 308,000 jars. (a) What is the incremental cost associated with producing an extra 44,000 jars of salsa? Incremental Cost $
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:The production cost information for Blossom's Salsa is as follows:
Blossom's Salsa
Production Costs
April 2020
22,000
Production
Jars of Salsa
Ingredient cost (variable)
$17,600
Labor cost (variable)
10,120
Rent (fixed)
4,900
Depreciation (fixed)
6,100
Other (fixed)
1,800
Total
$40,520
The company is currently producing and selling 264,000 jars of salsa annually. The jars sell for $8.00 each. The company is considering
lowering the price to $7.50. Suppose this action will increase sales to 308,000 jars.
(a)
What is the incremental cost associated with producing an extra 44,000 jars of salsa?
Incremental Cost $
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