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Question - Waterways is thinking of mass-producing one of its special-order sprinklers. To do so would increase unit variable costs for all sprinklers by an average of $0.60. The company also estimates that this change could increase the overall number of sprinklers sold by 10%, and the average unit sales price would increase $0.20. Waterways currently sells 500,000 sprinkler units at an average unit selling price of $25.80. The manufacturing costs are $6,976,770 variable and $1,75 1,261 fixed. Selling and administrative costs are $2,698,230 variable and $804,370 fixed. If the average unit sales price per sprinkler 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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