1) Data for Hermann Corporation are shown below:

	Per Unit				Percent of Sales
Selling price	$	110				100	%
Variable expenses		77				70
Contribution margin	$	33				30	%

Fixed expenses are $82,000 per month and the company is selling 3,500 units per month.

a. Refer to the original data. How much will net operating income increase (decrease) per month if the company uses higher-quality components that increase the variable expense by $5 per unit and increase unit sales by 20%.