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 $0.80 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 485,000 sprinkler units at an average selling price of $28.80. The manufacturing costs are $7,169,000 variable and $2,720,514 fixed. Selling and administrative costs are $2,608,600 variable and $796,520 fixed.
If Waterways begins mass-producing its special-order sprinklers, how would this affect the company?
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Home » Business » 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 $0.80 per unit.