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2 Required information [The following information applies to the questions displayed below] Data for Hermann Corporation are shown below: Selling price Variable expenses Contribution

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2 Required information [The following information applies to the questions displayed below] Data for Hermann Corporation are shown below: Selling price Variable expenses Contribution margin Per Unit $125 80 $45 Percent of Sales 100% 64 134% Fixed expenses are $85,000 per month and the company is selling 2,700 units per month. Required: 1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $9,000, the monthly sales volume increases by 100 units, and the total monthly sales increase by $12,500? 1-b. Should the advertising budget be increased?

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