Data for Hermann Corporation are shown below:

	Per Unit			Percent of Sales
Selling price	$	105		100%
Variable expenses		63		60%
Contribution margin	$	42		40%

Fixed expenses are $81,000 per month and the company is selling 3,800 units per month.

1-a.	The marketing manager argues that a $8,600 increase in the monthly advertising budget would increase monthly sales by $18,000. Calculate the increase or decrease in net operating income.

1-b.

Should the advertising budget be increased?

	Yes
	No