The 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 companys 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 727,000 units at an average selling price of $4.90 per unit. The variable costs were $2,137,380, and the fixed costs were $997,444.
Your answer is correct. what is the product's contribution margin ratio? (Round ratio to 0 decimal places, eg, 2596) Contribution margin ratio SHOW SOLUTION SHOW ANSWER LINK TO TEXT LINK TO TEXTLINK TO TEXT Your answer is correct. What is the company's break-even point in units and in dollars for this product? Break-even point in units Break-even point in dollars 508900 units 2493610 SHOW SOLUTION SHOW ANSWER LINK TO TEXT LINK TO TEXT LINK TO TEXT Your answer is correct. what is the margin of safety, both in dollars and as a ratio? (Round ratio to 0 decimal places, eg, 25%.) Margin of safety in dollars Margin of safety ratio 1068690 Your answer is correct. If management wanted to increase its income from this product by 1096, how many additional units would have to be sold to reach this income level? Waterways would have to sell an additional 21810 units SHOW SOLUTION SHOW ANSWER LINK TO TEXT LINK TO TEXT LINK TO TEXT E] Your answer is correct. If sales increase by 54,000 units and the cost behaviors do not change, how much will income increase on this product? Income will increase by 105840 SHOW SOLUTION SHOW ANSWER LINK TO TEXT LINK TO TEXT LINK TO TEXT Your answer is partially correct. Try again 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 $0.80 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 485,000 sprinkler units at an average selling price of $27.20. The manufacturing costs are $7,211,860 variable and $1,837,756 fixed. Selling and administrative costs are $2,682,140 variable and $790,290 fixed If Waterways begins mass-producing its special-order sprinklers, how would this affect the company? (Round ratio to 0 decimal places, eg, 5% and Net income to 0 decimal places, e.g. 2,520.) Effect Current New Contribution margin ratio : Decrease : by Net income by Increase LINK TO TEXT LINK TO TEXT LINK TO TEXT xYour answer is incorrect. Try again 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 $0.80 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 485,000 sprinkler units at an average selling price of $27.20. The manufacturing costs are $7,211,860 variable and $1,837,756 fixed. Selling and administrative costs are $2,682,140 variable and $790,290 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 O decimal places, eg, 590 or 2,520.) Contribution margin ratio Decrease Profit Decrease by Click if you would like to Show Work for this question: Open Sh or LINK TO TEXT LINK TO TEXT LINK TO TEXT Question Attempts: 1 of 2 used
