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Vice President for Sales and Marketing at Waterways Corporation is planning for production needs to meet sales demand in the coming year. He is also trying to determine how the company's profits might be increased in the coming year. This problem asks you to use cost-volume-profit concepts to help Waterways understand contribution margins of some of its products and decide whether to mass-produce any of them. Waterways markets a simple water control and timer that it mass-produces. Last year, the company sold 635,000 units at an average unit selling price of $3.70. The variable costs were $1,409,700, and the fixed costs were $639,064. Waterways is thinking of mass-producing one of its special-order sprinklers. To do so would increase unit variable costs for a sprinklers by an average of $0.70. The company also estimates that this change could increase the overall number of sprinkle sold by 10%, and the average unit sales price would increase $0.20. Waterways currently sells 486,000 sprinkler units at an average unit selling price of $24.20. The manufacturing costs are $5,578,190 variable and $2,049,102 fixed. Selling and administrative costs are $2,654,650 variable and $805,150 fixed. If Waterways begins mass-producing its special-order sprinklers, how would this affect the company? (Round ratio answers to decimal places, e.g. 5% and net income answers to 2 decimal places, e.g. 5,275.25.)

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