Data for Hermann Corporation are shown below:

	Per Unit	Percent of Sales
Selling price	$ 130	100%
Variable expenses	78	60
Contribution margin	$ 52	40%

Fixed expenses are $86,000 per month and the company is selling 2,800 units per month.

Required:

1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $9,100, the monthly sales volume increases by 100 units, and the total monthly sales increase by $13,000?

1-b. Should the advertising budget be increased?

Selling price Variable expenses Contribution margin Per Unit $ 130 78 $ 52 Percent of Sales 100% 60 40% Fixed expenses are $86,000 per month and the company is selling 2,800 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 $9,100, the monthly sales volume increases by 100 units, and the total monthly sales increase by $13,000? 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 $9,100, the monthly sales volume increases by 100 units, and the total monthly sales increase by $13,000? (Do not round intermediate calculations.) Net operating income by Selling price Variable expenses Contribution margin Per Unit $ 130 78 $ 52 Percent of Sales 100% 60 40% Fixed expenses are $86,000 per month and the company is selling 2,800 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 $9,100, the monthly sales volume increases by 100 units, and the total monthly sales increase by $13,000? 1-b. Should the advertising budget be increased? Complete this question by entering your answers in the tabs below. Req 1A Req 1B Should the advertising budget be increased? Yes No