Waterways Continuing Problem-6 (Part 1)
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 forecasted sales. The board of directors is very supportive of any initiatives that will lead to increased profits for the company in the upcoming year. Waterways markets a simple water controller and timer that it mass produces. During 2016, the company sold 332,500 units at an average selling price of $8 per unit. The variable expenses were $1,429,750, and the fixed expenses were $688,000.
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Waterways is considering mass producing one of its special-order screens. This wou ld increase variable costs for all screens by an average of $0.64 per unit. The company also estimates that this change could increase the overall number of screens sold of 10% , and the average sales price would increase of s0.23 per unit Waterways currently sells 442,570.0000000000 screen units at an average selling price of $26.00. The manufacturing costs are $6,177,161 variable and $1,845,130 fixed. Selling and administrative costs are $2,395,217 variable and $715,460 fixed. If Waterways begins mass producing its special-order screens, how would this affect the company? (Round percentage answers to 2 decimal places, e.g. 25.15 % and other answers to 0 decimal places, e.g. 5,275.) Current New Effect Contribution margin ratio by 46.25 Operating income by 779050 542250 LINK TO TE LINK TO T LINK TO TEXT LINK TO TEXT LINK TO TEXT LINK TO TEXT If the average sales price per screen unit did not increase when the company began mass producing the screen units, what would be the effect on the company? (Round percentage answer to 2 decimal places, e.g. 25.15 % and other answers to 0 decimal places, e.g. 5,275.) Contribution margin ratio will by Profit will by LINK TO T LINK TO TEXT LINK TO TEXT LINK TO TEXT LINK TO TEXT LINK TO TEXxT What is the product's contribution margin ratio? (Round answer to 2 decimal places, e.g. 25.15%.) Contribution margin ratio 46.25 LINK TO TEXT LINK TO TEXT LINK TO TT LINK TO XT LINK TO TEXT LINK TO TEXT What is the company's break-even point in units and in dollars for this product? (Round answers to 0 decimal places, e.g. 5,275.) Break-even point in units units 185946 Break-even point in dollars 1487568 LINK TO TEXT LINK TO TEXT LINK TO TEXT LINK TO TEXT LINK TO TEXT LINK TO TEXT 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 $ 1172432 Margin of safety ratio 146554 LINK TO TEXT LINK TO TEXT LINK TO TEXT LINK TO TEXT LINK TO TEXT LINK TO TEXT 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 14655 units LINK TO TEXT LINK TO TEXT LINK TO TEXT LINK TO TEXT LINK TO TEXT LINK TO TEXT If sales increase by 64,000 units and the cost behaviours do not change, how much will income increase on this product? (Round answer to 0 decimal places, e.g. 5,275.) Income will increase by 236800 LINK TO TEXT LINK TO TEXT LINK TO TEX LINK TO TEXT LINK TO TEXT LINK TO TEXT
