# Managerial Finance and Accounting

Santiago’s Salsa in Problem 1-1. The company is currently producing and selling 325,000 jars of
salsa 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.
Required
a. What is the incremental cost associated with producing an extra 50,000 jars of salsa? \$
b. What is the incremental revenue associated with the price reduction of \$0.40 per jar? \$
c. Should Santiago’s lower the price of its salsa?

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1. You might try some of the following links containing accounting tutorials:

http://search.yahoo.com/search?fr=mcafee&p=accounting+tutorials

Sra

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