Waterways is considering mass-producing one of its special-order screens. This would increase variable costs for all screens by an average of $0.80 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 $0.28 per unit. Waterways currently sells 556,000 screen units at an average selling price of $27.25. The manufacturing costs are $7,756,000 variable and $2,316,660 fixed. Selling and administrative costs are $3,030,400 variable and $898,290 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 DecreaseIncrease		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 decreaseincrease by enter percentages rounded to 1 decimal place %.

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