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Data for Hermann Corporation are shown below: Per Unit Percent of Sales Selling price $ 90 100% Variable expenses 63 70 Contribution margin $ 27
Data for Hermann Corporation are shown below:
Per Unit | Percent of Sales | |
---|---|---|
Selling price | $ 90 | 100% |
Variable expenses | 63 | 70 |
Contribution margin | $ 27 | 30% |
Fixed expenses are $78,000 per month and the company is selling 3,500 units per month.
Exercise 6-5 (Algo) Part 2
2-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 $4 per unit and increase unit sales by 20%.
2-b. Should the higher-quality components be used?
Req 2A
|
should the higher-quality components be used?
yes or no
\
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