mama lta Question 5 Mama Italiano Sauce is in the process of preparing a product

Question

mama lta Question 5 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) Rent (fixed) Depreciation (fixed) Other (fixed) Total 9,000 4,000 6,000 1,000 $36,000 Using this information, prepare a budget for May stating the total amount for the May budget. Assume the budget will increase to 22,000 jars of sauce reflecting anticipated sales increase related to a new marketing campaign Answer

Explanation / Answer

May's budget:

Explanations:

Here as the quantity increased to 22,000 (from 20,000) the variable costs will increase while fixed costs will remain constant.

Ingredient costs = 16,000/20,000*22,000 = 17,600

Labor costs = 9,000/20,000*22,000 = 9,900

Other costs will remain the same as they are fixed.

Production-Jars of sauce 22,000.00 Ingredients costs (variable) 17,600.00 Labor costs (variable) 9,900.00 Rent (fixed) 4,000.00 Depreciation (fixed) 6,000.00 Other (fixed) 1,000.00 Total costs 38,500.00

Related Questions

Navigate

• Browse (All)
• Browse M
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.