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
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?