b) 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 491740 sprinkler units at an average selling price of $26.50. The manufacturing costs are $6863512
variable and $2050140 fixed. Selling and administrative costs are $2651657 variable and $794950 fixed.
(1) If Waterways begins mass-producing its special-order sprinklers how would this affect the company?
(2) 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?