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Data for Hermann Corporation are shown below: Per Unit Percent of Sales Selling price $ 120 100 % Variable expenses 78 65 Contribution margin $
Data for Hermann Corporation are shown below:
Per Unit | Percent of Sales | ||||||
Selling price | $ | 120 | 100 | % | |||
Variable expenses | 78 | 65 | |||||
Contribution margin | $ | 42 | 35 | % | |||
Fixed expenses are $84,000 per month and the company is selling 2,600 units per month.
Garrison 16e Rechecks 2017-05-02
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 $5 per unit and increase unit sales by 20%.
2-b. Should the higher-quality components be used?
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