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Data for Hermann Corporation are shown below: Per Unit Percent of Sales Selling price $ 85 100% Variable expenses 51 60% Contribution margin $ 34

Data for Hermann Corporation are shown below:

Per Unit Percent of Sales
Selling price $ 85 100%
Variable expenses 51 60%
Contribution margin $ 34 40%

Fixed expenses are $77,000 per month and the company is selling 2,600 units per month.

2-a.

Refer to the original data. Management is considering using higher-quality components that would increase the variable expense by $5 per unit. The marketing manager believes that the higher-quality product would increase sales by 20% per month. Calculate the change in total contribution margin.

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