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 $0.60 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 500,000 sprinkler units at an average selling price of $25.80. The manufacturing costs are $6,976,770 variable and $1,751,261 fixed. Selling and administrative costs are $2,698,230 variable and $804,370 fixed.

If Waterways begins mass-producing its special-order sprinklers, how would this affect the company?(Round ratio to 0 decimal places, e.g. 5% and Net income to 0 decimal places, e.g. 2,520.)

Current New Effect

Contribution margin 25% 23% decrease by 2%

Net Income 669369 _________ increased by________

Current