AT&T; LTE 12:43 AM learn.umuc.edu * 20% Question 5 (1 point) Mama Italiano Sauce

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AT&T; LTE 12:43 AM learn.umuc.edu * 20% Question 5 (1 point) 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 24,500 jars of sauce reflecting anticipated sales increase related to a new marketing campaign Your Answer:

Explanation / Answer

Production cost budget for May:

Calculations:

Only variable costs will change. Ingredient cost = 16,000/20,000*24,500 = 19600

Labor cost = 9000/20000*24500 = 11025

Rent, depreciation and other fixed costs will remain the same.

Production - Jars of sauce 24,500.00 Ingredient cost 19,600.00 Labor cost 11,025.00 Rent 4,000.00 Depreciation 6,000.00 Other 1,000.00 Total 41,625.00

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