Waterways is thinking of mass-producing one of its special-order sprinklers. To do so would increase unit variable costs for allsprinklers by an average of $0.60. The company also estimates that this change could increase the overall number of sprinklerssold by 10%, and the average unit sales price would increase $0.20. Waterways currently sells 489,000 sprinkler units at anaverage unit selling price of $28.20. The manufacturing costs are $8,393,890 variable and $1,283,761 fixed. Selling andadministrative costs are $2,637,950 variable and $800,440 fixed.If the average unit sales price per sprinkler did not increase when the company began mass-producing the special-order sprinkler,what would be the effect on the company? (Round ratio answer to O decimal places, e.g. 5% and profit answer to 2 decimal places, e.g.5,275.25.)Contribution margin ratioProfitbybyLA$%

Contribution margin ratioDecreaseby7%ProfitDecreaseby46944Explanation: CurrentContribution margin…

Answered: Waterways is thinking of mass-producing…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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