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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
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 501,000 sprinkler units at an average selling price of $28.60. The manufacturing costs are $8,831,600 variable and $1,395,533 fixed. Selling and administrative costs are $2,631,280 variable and $787,310 fixed. If Waterways begins mass-producing its special-order sprinklers, how would this affect the company? (Round ratio to O decimal places, e.g. 5% and Net income to O decimal places, e.g. 2,520.) Contribution margin ratio Net income +A $ Current 30 % +A $ New do % Decrease by Increase by Effect CA
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