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 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.
If Waterways begins mass-producing its special-order sprinklers, how would this affect the company? (Round ratio to 0 decimal places, e.g. 5% and Net income to 2 decimal places, e.g. 2, 520.25.)