Incremental Analysis

  
Suzy’s Soups is in the process of preparing a production cost budget for the coming month.

Actual costs at the end of the current month were:
Production25,000 Jars of soupIngredient cost (variable)$20,000Labor cost (variable)12,000Depreciation (fixed)6,000Other (fixed)1,000Total$39,000
REQUIRED

Don't use plagiarized sources. Get Your Custom Essay on
Incremental Analysis
Just from $13/Page
Order Essay

Using this information, prepare a budget for the coming month. Assume that production will increase to 30,000 jars of soup, reflecting an anticipated sales increase related to a new marketing campaign.
Does the budget suggest that additional workers are needed (each worker can work only 40 hours per week)? Suppose the wage rate is $20 per hour. How many additional labor hours are needed for the coming month? What would happen if management did not anticipate the need for additional labor in the coming month?
Calculate the actual cost per unit at the end of the current month and the budgeted cost per unit for the coming month. Explain why the cost per unit is expected to decrease.

The company is currently producing and selling 325,000 jars of soup annually. The jars sell for $5.00 each. The company is considering lowering the price to $4.60. Suppose this action will increase sales to 375,000 jars.

What is the incremental cost associated with producing an extra 50,000 jars of soup?
What is the incremental revenue associated with the price reduction of $0.40 per jar?
Should Suzy’s lower the price of its soup?

Use this spreadsheet
Submit your completed assignment by following the directions linked below. Please check the Course Calendar for specific due dates.

Save your assignment as a Microsoft Excel document. (Mac users, please remember to append the “.xslx” extension to the filename.) The name of the file should be your first initial and last name, followed by an underscore and the name of the assignment, and an underscore and the date. An example is shown below:

Jstudent_exampleproblem_101504

Need Help? Click here for complete drop box instructions.
 

Order your essay today and save 15% with the discount code: APRICOT

Order a unique copy of this paper

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
Top Academic Writers Ready to Help
with Your Research Proposal
error: Content is protected !!
Live Chat+1(405) 367-3611Email