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 $0.60. 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 489,000 sprinkler units at an average unit selling price of $28.20. The manufacturing costs are $8,393,890 variable and $1,283,761 fixed. Selling and administrative 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 ratio Profit by by LA $ %
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 $0.60. 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 489,000 sprinkler units at an average unit selling price of $28.20. The manufacturing costs are $8,393,890 variable and $1,283,761 fixed. Selling and administrative 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 ratio Profit by by LA $ %
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 $0.60. 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 489,000 sprinkler units at an
average unit selling price of $28.20. The manufacturing costs are $8,393,890 variable and $1,283,761 fixed. Selling and
administrative 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 ratio
Profit
by
by
LA
$
%
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