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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 490,000 sprinkler units at an average unit selling price of $24.40. The manufacturing costs are $5,760,440 variable and $2,101,930 fixed. Selling and administrative costs are $2,608,760 variable and $806,080 fixed. If Waterways begins mass-producing its special-order sprinklers, how would this affect the company? (Round ratio answers to O decimal places, e.g. 5% and net income answers to 2 decimal places, eg. 5,275.25) Current 30 678790 New Effect 36 Decrease by 5.12 i % 288120 Increase 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 490,000 sprinkler units at an average unit selling price of $24.40. The manufacturing costs are $5,760,440 variable and $2,101,930 fixed. Selling and administrative costs are $2,608,760 variable and $806,080 fixed. If Waterways begins mass-producing its special-order sprinklers, how would this affect the company? (Round ratio answers to O decimal places, e.g. 5% and net income answers to 2 decimal places, eg. 5,275.25) Current 30 678790 New Effect 36 Decrease by 5.12 i % 288120 Increase by

FINANCIAL ACCOUNTING
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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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 490,000 sprinkler units at an average unit selling price of $24.40. The manufacturing costs are $5,760,440 variable and $2,101,930 fixed. Selling and administrative costs are $2,608,760 variable and $806,080 fixed. If Waterways begins mass-producing its special-order sprinklers, how would this affect the company? (Round ratio answers to O decimal places, e.g. 5% and net income answers to 2 decimal places, e.g. 5,275.25.) Current 30 678790 New Effect 36 % Decrease by 5.12 % 288120 Increase by
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 490,000 sprinkler units at an average unit selling price of $24.40. The manufacturing costs are $5,760,440 variable and $2,101,930 fixed. Selling and administrative costs are $2,608,760 variable and $806,080 fixed. If Waterways begins mass-producing its special-order sprinklers, how would this affect the company? (Round ratio answers to O decimal places, e.g. 5% and net income answers to 2 decimal places, e.g. 5,275.25.) Current 30 678790 New Effect 36 % Decrease by 5.12 % 288120 Increase by
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