eting at Waterways Corporation is planning for production neds to meet sales demand in the coming year. He is also trying to increased in the coming year. This problem asks you to use cost-volume-profit concepts to help Waterways understand The Vice President for Sales and Marketing is planning for determine how the company's profits might be contribution margins of some of its products and decide whether to mass-produce any of them. Waterways markets a simple water control and timer that it mass-produces. Last year, the company sold 720,000 units at an average selling price of $4.90 per unit. variable costs were $2,116,800, and the fixed costs were $945,504 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 S0.60 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 489,000 sprinkler units at an average selling price of $28.20. The manufacturing costs are $8,393890 variable and $1.283,761 fned Selling and administrative costs are $2,637,950 variable and $800,440 fixed. f 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, eg. 5% or 2,520.) Profit What is the product's contribution margin ratio? (Round ratio to O decimal places, e.g. 25%) 401 % Contribution margin ratio What is the company's break-even point in units and in dollars for this product? Break-even point in units 482400units $ Break-even point in dollars 2363760 What is the margin of safety, both in dollars and as a ratio? (Round ratio to o decimal plae $ 164240 Margin of safety in dollars 33 11 96 Margin of safety ratio If man to increase its income from this product by 10%, how m any additional units would have to be sold to reach this income level? 23760 units Waterways would have to sell an additional If sales increase by 48,000 units and the cost behaviors do not change, how much will income increase on this product? $ Income will increase by 94080 ng one of its special-order sprinklers. To do so would increase variable costs for all sprinklers by an average of $0.60 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 489,000 sprinkler units at an average 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. r waterways begins mass producing its special order sprinklers, how would this affect the company? Round ratio to O decimal places, eg. 5% and Net income to O decimal places, e.g. 2,520.) Effect New ]% [Decrease.] by ncreaseby $ 201%
