Question

Question 6 (1 point) Saved Consider the production cost information for Mama Italiano Sauce given below: Mama Italian Sauce Production Cost Budget April 2008 Production - Jars of sauce 20,000 Ingredient cost (variable) $16,000 Labor cost (variable) 9.000 Rent (fixed) 4,000 Depreciation (fixed) 6,000 Other (fixed) 1.000 Total $36,000

Answer 1

Calculation of incremental cost of producing extra 59000 Jars
Fixed cost will remain the same at every level of production
Extract of the variable cost of production cost report-April'2018
	No of units	Cost	Cost per unit= Cost/No of units
Ingredient cost	20,000	$ 16,000.00	$           0.80
Labor cost	20,000	$   9,000.00	$           0.45
Now, we will use these per-unit rates for additional 59,000 units
	No of units	Cost per unit	Cost per unit*No of units
Ingredient cost	59,000	$           0.80	$ 47,200.00
Labor cost	59,000	$           0.45	$ 26,550.00
Total additional cost			$ 73,750.00