Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

need answers to all red boxes including ones on right Vice President for Sales and Marketing at Waterways Corporation is planning for production needs to

image text in transcribed

need answers to all red boxes including ones on right

Vice President for Sales and Marketing at Waterways Corporation is planning for production needs to meet sales demand in the coming year. He is also trying to determine how the company's profits might be increased in the coming year. This problem asks you to use cost-volume-profit concepts to help Waterways understand 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 635,000 units at an average unit selling price of $3.70. The variable costs were $1,409,700, and the fixed costs were $639,064. Waterways is thinking of mass-producing one of its special-order sprinklers. To do so would increase unit variable costs for a sprinklers by an average of $0.70. The company also estimates that this change could increase the overall number of sprinkle sold by 10%, and the average unit sales price would increase $0.20. Waterways currently sells 486,000 sprinkler units at an average unit selling price of $24.20. The manufacturing costs are $5,578,190 variable and $2,049,102 fixed. Selling and administrative costs are $2,654,650 variable and $805,150 fixed. If Waterways begins mass-producing its special-order sprinklers, how would this affect the company? (Round ratio answers to decimal places, e.g. 5% and net income answers to 2 decimal places, e.g. 5,275.25.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered 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

Students also viewed these Accounting questions