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Chapter 6 Question 2: Data for Hermann Corporation are shown below: Per Unit Percent of Sales Selling price $ 100 100 % Variable expenses 61
Chapter 6 Question 2:
Data for Hermann Corporation are shown below:
Per Unit | Percent of Sales | ||||||
Selling price | $ | 100 | 100 | % | |||
Variable expenses | 61 | 61 | |||||
Contribution margin | $ | 39 | 39 | % | |||
Fixed expenses are $80,000 per month and the company is selling 3,700 units per month.
Required:
1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $8,500 and monthly sales increase by $17,500?
1-b. Should the advertising budget be increased?
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