Waterways is thinking of mass-producing one of its special-order sprinklers. To do so would increase variable costs for all sprinklers by an average of $0.70 per unit. The company also estimates that this change could increase the overall number of sprinklers sold by 10%, and the average sales price would increase $0.20 per unit. Waterways currently sells 495,000 sprinkler units at an average selling price of $25.80. The manufacturing costs are $6,954,830 variable and $1,723,025 fixed. Selling and administrative costs are $2.623,420 variable and $807,800 fixed.

If Waterways begins mass-producing its special-order sprinklers, how would this affect the company?

	CURRENT	NEW		EFFECT
CONTRIBUTION MARGIN RATIO	_____%	____%	INCREASE OR DECREASE	BY ___%
NET INCOME	$__________	$____________	INCREASE OR DECREASE	BY $__________