The production cost information for Blossom's Salsa is as follows: Blossom's...
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Accounting
The production cost information for Blossom's Salsa is as follows:
| Blossom's Salsa Production Costs April 2020 | ||||
|---|---|---|---|---|
| Production | 23,000 Jars of Salsa | |||
| Ingredient cost (variable) | $13,800 | |||
| Labor cost (variable) | 9,660 | |||
| Rent (fixed) | 4,300 | |||
| Depreciation (fixed) | 6,000 | |||
| Other (fixed) | 1,400 | |||
| Total | $35,160 |
The company is currently producing and selling 345,000 jars of salsa annually. The jars sell for $7.00 each. The company is considering lowering the price to $6.30. Suppose this action will increase sales to 391,000 jars.
(a)
What is the incremental cost associated with producing an extra 46,000 jars of salsa?
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