Data for Hermann Corporation are shown below:

Per Unit Percent of Sales

Selling price $140 100%

Variable expenses 91 65

Contribution margin $49 35%

Fixed expenses are $88,000 per month and the company is selling 3,000 units per month.

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 $6 per unit and increase unit sales by 20%.

2-b. Should the higher-quality components be used?

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

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 $6 per unit and increase unit sales by 20%.