Chapter 1
Sanchez Sweets is in the process of preparing a production cost budget for May.
Actual costs in April are given in the table below based on				7,000	batches
Ingredients cost	$ 7,500		The company is currently producing and selling batches . 80,000
Rent	$ 2,100		of cookies annually. The average selling price per batch is: $8.30
Labor cost	$ 3,700		The company is considering lowering the price to: . $7.60
Depreciation	$ 1,000		per batch. Management estimates this will increase
Other fixed costs	$ 800		annual sales by. 10,000
Total	$ 15,100		batches. Ingredients and labor are the only variable costs.
Q5
What is the incremental cost associated with					???
producing an extra 10,000 batches of cookies?
Q6
What is the incremental revenue associated					???
with the price reduction?
Q7
Is it profitable for Sanchez Sweets to lower the price					???
of its cookies? If Yes enter 1 or if No enter 2
Q8
If you answered Yes to Q7, what is the net increase in profits?					???