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 497,000 sprinkler units at an average unit selling price of $25.80. The manufacturing costs are $7,012,120 variable and $1,732,000 fixed. Selling and administrative costs are $2,604,830 variable and $795,170 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 0 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 tA 3 i 124250 %
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 497,000 sprinkler units at an average unit selling price of $25.80. The manufacturing costs are $7,012,120 variable and $1,732,000 fixed. Selling and administrative costs are $2,604,830 variable and $795,170 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 0 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 tA 3 i 124250 %
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 497,000 sprinkler units at an
average unit selling price of $25.80. The manufacturing costs are $7,012,120 variable and $1,732,000 fixed. Selling and
administrative costs are $2,604,830 variable and $795,170 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.)
Profit
Contribution margin ratio
eTextbook and Media
Decrease
Decrease
by
by
$
tA
3 i
124250
%
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