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Data for Hermann Corporation are shown below: Per Unit Percent of Sales Selling price $ 90 100% Variable expenses 63 70 Contribution margin $ 27
Data for Hermann Corporation are shown below:
Per Unit | Percent of Sales | |
---|---|---|
Selling price | $ 90 | 100% |
Variable expenses | 63 | 70 |
Contribution margin | $ 27 | 30% |
Fixed expenses are $78,000 per month and the company is selling 3,500 units per month.
Required:
1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $8,300, the monthly sales volume increases by 100 units, and the total monthly sales increase by $9,000?
1-b. Should the advertising budget be increased?
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