Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Waterways is considering mass-producing one of its special-order screens. This would increase variable costs for all screens by an average of $0.84 per unit. The
Waterways is considering mass-producing one of its special-order screens. This would increase variable costs for all screens by an average of $0.84 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 $0.30 per unit. Waterways currently sells 585,000 screen units at an average selling price of $28.50. The manufacturing costs are $8,168,000 variable and $2,439,670 fixed. Selling and administrative costs are $3,181,000 variable and $945,990 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 o decimal places, e.g. 5,275.) Current New Effect Contribution margin ratio % % by % Operating income by $ $ 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 by %. Profit will by $
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started