Waterways

(Note: This is a continuation of the Waterways case from Chapters 1-4.)

5.WP5

The Vice President for Sales and Marketing at Waterways Corporation is planning for production needs to meet sales demand in the coming year. He is also trying to determine how the company's profits might be increased in the coming year. This problem asks you to use cost-volume-profit concepts to help Waterways understand contribution margins of some of its products and decide whether to mass-produce any of them.

Waterways Problem 05

Waterways markets a simple water control and timer that it mass-produces. Last year, the company sold 657,000 units at an average selling price of $4.40 per unit. The variable costs were $1,734,480, and the fixed costs were $809,424.

Contribution Margin Income Statement for Water Control and Timer
For the Year 2019
		Per unit	Percentage
Sales (657,000 units)
Variable expenses
Contribution margin
Fixed Expenses
Net income from product
(2)	Break-even point in units
Fixed expenses			units
Unit CM
	Break-even point in dollars
Fixed expenses
CM ratio