Data for Hermann Corporation are shown below:

	Per Unit				Percent of Sales
Selling price	$	60				100	%
Variable expenses		39				65
Contribution margin	$	21				35	%

Fixed expenses are $72,000 per month and the company is selling 4,200 units per month.

Garrison 16e Rechecks 2017-05-02

Exercise 5-5 Part 1

Required:

1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $9,600 and monthly sales increase by $23,000?

1-b. Should the advertising budget be increased?

How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $9,600 and monthly sales increase by $23,000? (Do not round intermediate calculations.)

Net operating income

by

Should the advertising budget be increased?

	Yesradio button unchecked1 of 2 Noradio button unchecked2 of 2