Data for Hermann Corporation are shown below:

	Per Unit				Percent of Sales
Selling price	$	65				100	%
Variable expenses		39				60
Contribution margin	$	26				40	%

Fixed expenses are $73,000 per month and the company is selling 4,300 units per month.

Exercise 5-5 (Algo) Part 1

Required:

1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $9,700, the monthly sales volume increases by 100 units, and the total monthly sales increase by $6,500?

1-b. Should the advertising budget be increased?

Complete this question by entering your answers in the tabs below.

• Req 1A
• Req 1B

How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $9,700, the monthly sales volume increases by 100 units, and the total monthly sales increase by $6,500? (Do not round intermediate calculations.)

should the advertising budget be increased?

yes or no