Waterways is thinking of mass-producing one of its special-order sprinklers. To do so would increase variable costs for all sprinklers by an average of $0.70 per unit. The company also estimates that this change could increase the overall number of sprinklers sold by 10%, and the average sales price would increase $0.20 per unit. Waterways currently sells 495,000 sprinkler units at an average selling price of $24.20. The manufacturing costs are $5,777,930 variable and $2,147,925 fixed. Selling and administrative costs are $2,607,370 variable and $787,450 fixed. If the average sales price per sprinkler unit did not increase when the company began mass-producing the special-order sprinkler, what would be the effect on the company? (Round answers to O decimal places, e.g. 5% or 2,520.) Contribution margin ratio Profit by by $ %
Waterways is thinking of mass-producing one of its special-order sprinklers. To do so would increase variable costs for all sprinklers by an average of $0.70 per unit. The company also estimates that this change could increase the overall number of sprinklers sold by 10%, and the average sales price would increase $0.20 per unit. Waterways currently sells 495,000 sprinkler units at an average selling price of $24.20. The manufacturing costs are $5,777,930 variable and $2,147,925 fixed. Selling and administrative costs are $2,607,370 variable and $787,450 fixed. If the average sales price per sprinkler unit did not increase when the company began mass-producing the special-order sprinkler, what would be the effect on the company? (Round answers to O decimal places, e.g. 5% or 2,520.) Contribution margin ratio Profit by by $ %
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Waterways is thinking of mass-producing one of its special-order sprinklers. To do so would increase variable costs for all
sprinklers by an average of $0.70 per unit. The company also estimates that this change could increase the overall number of
sprinklers sold by 10%, and the average sales price would increase $0.20 per unit. Waterways currently sells 495,000 sprinkler
units at an average selling price of $24.20. The manufacturing costs are $5,777,930 variable and $2,147,925 fixed. Selling and
administrative costs are $2,607,370 variable and $787,450 fixed.
If the average sales price per sprinkler unit did not increase when the company began mass-producing the special-order sprinkler,
what would be the effect on the company? (Round answers to O decimal places, e.g. 5% or 2,520.)
Contribution margin ratio
Profit
by
by
$
%
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