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Question - 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 $0.70 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 490,000 sprinkler units at an average selling price of $24.40. The manufacturing costs are $5,760,440 variable and $2,101,930 fixed. Selling and administrative costs are $2,608,760 variable and $806,080 fixed. If the average sales price per sprinkler unit did not increase when the company began mass-producing the special-order sprinkler, what would be the effect on the company?
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