Mama Italiano Sauce is in the process of preparing a production cost budget for
ID: 2760747 • Letter: M
Question
Mama Italiano Sauce is in the process of preparing a production cost budget for May. The actual costs in April were:
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
Using this information, prepare a budget for May stating the total amount for the May budget. Assume the budget will increase to 24,500 jars of sauce reflecting anticipated sales increase related to a new marketing campaign
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
$36,000
Explanation / Answer
Production Cost Budget Production - Jars of sauce 20000 Units Cost Per Unit 24500 Units Ingredient cost (variable) 16000 0.8 19600 Labor cost (variable) 9000 0.45 11025 Rent (fixed) 4000 4000 Depreciation (fixed) 6000 6000 Other (fixed) 1000 1000 Total 36000 41625 Total Budget =$ 41625
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