Your answer is partially correct. 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 484,000 sprinkler units at an average unit selling price of $28.20. The manufacturing costs are $7,589,350 variable and $1,925,074 fixed. Selling and administrative costs are $2,647,250 variable and $805,500 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.)
Your answer is partially correct. 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 484,000 sprinkler units at an average unit selling price of $28.20. The manufacturing costs are $7,589,350 variable and $1,925,074 fixed. Selling and administrative costs are $2,647,250 variable and $805,500 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.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Your answer is partially correct.
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 484,000 sprinkler units at an average unit selling price of $28.20. The manufacturing costs are $7,589,350 variable and $1,925,074
fixed. Selling and administrative costs are $2,647,250 variable and $805,500 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.)
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