Question

Waterways is considering mass-producing one of its special-order screens. This would increase variable costs for all screens by an average of $0.64 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 $0.23 per unit. Waterways currently sells 443,000 screen units at an average selling price of $26.00. The manufacturing costs are $6,177,000 variable and $1,845,130 fixed. Selling and administrative costs are $2,417,200 variable and $715,460 fixed.

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

Current New Effect Contribution margin ratio % % IncreaseDecrease by % Operating income $ $ IncreaseDecrease by $

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 decreaseincrease by %. Profit will decreaseincrease by $ .

Answer 1

Roundoff the answer as per the detail given in the question.

Comment below if you have any query i will solve it asap !! thanks