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 491,740 sprinkler units at an average selling price of $26.50. The manufacturing costs are $6,863,512 variable and $2,050,140 fixed. Selling and administrative costs are $2,651,657 variable and $794,950 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?
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