Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

can you please help me set this problem up? thanks Waterways is thinking of mass-producing one of its special-order sprinklers. To do so would increase

can you please help me set this problem up? thanks

image text in transcribed
Waterways is thinking of mass-producing one of its special-order sprinklers. To do so would increase variable costs for all sprinklers by an average of $0.70 per unit. The company also estimates that this change could increase the overall number of sprinklers sold by 10%, and the average sales price would increase $0.20 per unit. Waterways currently sells 501,000 sprinkler units at an average selling price of $28.60. The manufacturing costs are $8,831,600 variable and $1,395,533 fixed. Selling and administrative costs are $2,631,280 variable and $787,310 fixed. If Waterways begins mass-producing its special-order sprinklers, how would this affect the company? (Round ratio to 0 decimal places, e.g. 5% and Net income to 0 decimal places, e.g. 2,520.) Current New Effect Contribution margin ratio 20% 22% Increase v N % Net income 682877 LA 833110 Increase by 150233 LINK TO TEXT LINK TO TEXT LINK TO TEXT Waterways is thinking of mass-producing one of its special-order sprinklers. To do so would increase variable costs for all sprinklers by an average of $0.70 per unit. The company also estimates that this change could increase the overall number of sprinklers sold by 10%, and the average sales price would increase $0.20 per unit. Waterways currently sells 501,000 sprinkler units at an average selling price of $28.60. The manufacturing costs are $8,831,600 variable and $1,395,533 fixed. Selling and administrative costs are $2,631,280 variable and $787,310 fixed. If the average sales price per sprinkler unit did not increase when the company began mass-producing the special-order sprinkler, what would be the effect on the company? (Round answers to 0 decimal places, e.g. 5% or 2,520.) Contribution margin ratio 4 Profit by Click if you would like to Show Work for this question: Open Show Work

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting Tools for Business Decision Making

Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso, Ibrahim M. Aly

4th Canadian edition

1118856996, 978-1118856994

More Books

Students also viewed these Accounting questions