Production Of Jars 20 000 Ingredient Variable Cost 16 000 Labor Variable 9 000 R

Production of jars 20,000

Ingredient (variable cost)            $16,000

Labor (variable)                            9,000

Rent (fixed)                                   4,000

Depreciation (fixed)                     6,000

Other (fixed)                                 1,000

Total                                               $36,000

1.      The jars sell for $4.00 each. If the price is lowered to $3.70 each. What is the incremental costs producing an extra $62,750 jars?

2.      If the company is selling 250,000 jars a year and the jars sell for $4.00 each. The company wants to lower the price to $3.65 each and sales increase to 312,000 per jar. What is the incremental revenue relating to the reduction?

Prof. Angela

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