The vice-president of sales and marketing, Madison Tremblay, is trying to plan for the coming year in terms of production needs to meet the forecast sales. The board of directors is very supportive of any initiatives that will lead to increased operating income for the company in the upcoming year. Waterways markets a simple water controller and timer that it mass-produces. During 2022, the company sold 335,000 units at an average selling price of $8.00 per unit. The variable costs were $1,507,500, and the fixed costs were $759,500.

What is the products contribution margin ratio? (Round answer to 2 decimal places, e.g. 22.25%.)

Contribution margin ratio

enter the contribution margin ratio in percentages rounded to 2 decimal places

%

What is the companys break-even point in units and in dollars for this product? (Round intermediate calculations to 2 decimal places, e.g. 15.25 or 15.25% and final answers to 0 decimal places, e.g. 5,275.)

Break-even point in sales units		enter the break-even point in units rounded to 0 decimal places	units
Break-even point in sales dollars		$enter the break-even point in dollars rounded to 0 decimal places

What is the margin of safety, both in dollars and as a ratio? (Round ratio to 2 decimal places, e.g. 25.25%.)

Margin of safety in dollars		$enter the margin of safety in dollars
Margin of safety ratio		enter the margin of safety ratio in percentages rounded to 2 decimal places	%

If management wanted to increase income from this product by 10%, how many additional units would the company have to sell to reach this income level? (Round answer to 0 decimal places, e.g. 5,275.)

Waterways would have to sell an additional

enter a number of units rounded to 0 decimal places

units

If sales increase by 67,000 units and the cost behaviours do not change, how much will income increase on this product?

Income will increase by

$enter the increase in income in dollars

Waterways is considering mass-producing one of its special-order screens. This would increase variable costs for all screens by an average of $0.67 per unit. The company also estimates that this change could increase the overall number of screens sold by 10%, and the average sales price would increase by $0.24 per unit. Waterways currently sells 467,000 screen units at an average selling price of $26.50. The manufacturing costs are $6,520,000 variable and $1,947,630 fixed. Selling and administrative costs are $2,539,800 variable and $755,200 fixed. If Waterways begins mass-producing its special-order screens, how would this affect the company? (Round contribution margin ratio to 1 decimal place, e.g. 15.2% and operating income to 0 decimal places, e.g. 5,275.)

		Current			New			Effect
Contribution margin ratio		enter percentages rounded to 1 decimal place	%		enter percentages rounded to 1 decimal place	%		select an effect IncreaseDecrease		by		enter percentages rounded to 1 decimal place	%
Operating income		$enter a dollar amount rounded to 0 decimal places			$enter a dollar amount rounded to 0 decimal places			select an effect DecreaseIncrease		by		$enter a dollar amount rounded to 0 decimal places

If the average sales price per screen did not increase when the company began mass-producing the screen, what would be the effect on the company? (Round change in contribution margin ratio to 1 decimal place, e.g. 15.2% and change in profit to 0 decimal places, e.g. 5,275.)

Contribution margin ratio will select an effect increasedecrease by enter percentages rounded to 1 decimal place %.

Profit will select an effect increasedecrease by $enter a dollar amount rounded to 0 decimal places .