Question
Waterways is considering mass-producing one of its special-order screens. This would increase variable costs for all screens by an average of $0.64 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 $0.64 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 $0.23 per unit. Waterways currently sells 443,000 screen units at an average selling price of $26.00. The manufacturing costs are $6,177,000 variable and $1,845,130 fixed. Selling and administrative costs are $2,417,200 variable and $715,460 fixed. If Waterways begins mass-producing its special-order screens, how would this affect the company?
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