4.Data for Hermann Corporation are shown below:

Per UnitPercent

of SalesSelling price$90100%Variable expenses6370Contribution margin$2730%

Fixed expenses are $30,000 per month and the company is selling 2,000 units per month.

Required:

1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $5,000 and monthly sales increase by $9,000?

1-b. Should the advertising budget be increased?