Data for Hermann Corporation are shown below:

	Per Unit				Percent of Sales
Selling price	$	135				100	%
Variable expenses		81				60
Contribution margin	$	54				40	%

Fixed expenses are $87,000 per month and the company is selling 2,900 units per month.

Exercise 6-5 Part 1

Required:

1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $9,200 and monthly sales increase by $21,000?

1-b. Should the advertising budget be increased?

Should the advertising budget be increased?

Yes []

No []