Waterways is thinking of mass-producing one of its special-order sprinklers. To do so would increase unit variable costs for all sprinklers by an average of $0.70. The company also estimates that this change could increase the overall number of sprinklers sold by 10%, and the average unit sales price would increase $0.20. Waterways currently sells 493,000 sprinkler units at an average unit selling price of $25.40. The manufacturing costs are $6,147,410 variable and $2,284,405 fixed. Selling and administrative costs are $2,618,130 variable and $796,110 fixed. If the average unit sales price per sprinkler did not increase when the company began mass-producing the special-order sprinklem what would be the effect on the company? (Round ratio answer to 0 decimal places, eg. 5% and profit answer to 2 decimal places, e.g. 5,275.25.) Contribution margin ratio Profit Decrease Decrease by by $
Waterways is thinking of mass-producing one of its special-order sprinklers. To do so would increase unit variable costs for all sprinklers by an average of $0.70. The company also estimates that this change could increase the overall number of sprinklers sold by 10%, and the average unit sales price would increase $0.20. Waterways currently sells 493,000 sprinkler units at an average unit selling price of $25.40. The manufacturing costs are $6,147,410 variable and $2,284,405 fixed. Selling and administrative costs are $2,618,130 variable and $796,110 fixed. If the average unit sales price per sprinkler did not increase when the company began mass-producing the special-order sprinklem what would be the effect on the company? (Round ratio answer to 0 decimal places, eg. 5% and profit answer to 2 decimal places, e.g. 5,275.25.) Contribution margin ratio Profit Decrease Decrease by by $
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Waterways is thinking of mass-producing one of its special-order sprinklers. To do so would increase unit variable costs for all
sprinklers by an average of $0.70. The company also estimates that this change could increase the overall number of sprinklers
sold by 10%, and the average unit sales price would increase $0.20. Waterways currently sells 493,000 sprinkler units at an
average unit selling price of $25.40. The manufacturing costs are $6,147,410 variable and $2,284,405 fixed. Selling and
administrative costs are $2,618,130 variable and $796,110 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 ratio
Profit
Decrease
Decrease
by
by
$
+A
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