Question

Waterways is considering mass producing one of its special-order screens. This would increase variable costs for all screens by an average of $0.62 per unit. The company also estimates that this change could increase the overall number of screens sold of 10%, and the average sales price would increase of $0.22 per unit. Waterways currently sells 432,730.0000000000 screen units at an average selling price of $26.00. The manufacturing costs are $6,039,891 variable and $1,804,120 fixed. Selling and administrative costs are $2,341,990 variable and $699,560 fixed. If Waterways begins mass producing its special-order screens, how would this affect the company? (Round percentage answers to 2 decimal places, e.g. 25.15% and other answers to 0 decimal places, e.g. 5,275.) Current New Effect Contribution margin ratio ____ % ____ % Decrease/Increase by ____ % Operating income $____ $____ Increase/Decrease by $____

If the average sales price per screen unit did not increase when the company began mass producing the screen units, what would be the effect on the company? (Round percentage answer to 2 decimal places, e.g. 25.15% and other answers to 0 decimal places, e.g. 5,275.) Contribution margin ratio will decrease/increase by ______%. Profit will decrease/increase by $______ .

Answer 1

Solution:

Workings:

The average sales price per screen unit did not increase when the company began mass producing the screen units, what would be the effect on the company?

Workings:

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