Data for hermann corporation are shown below Percent Per unit. Of sales Selling price. 95. 100% Variable exp. 57. 60% ------------------------------------------- Contribution. 38. 40% Fixed expense are $79,000 per month and the company is selling 3,600 units per month. 1a. The marketing manager argues that a $8,400 increase in the monthly advertising budget would increase monthly sales by $17 000. Calculate the increase or decrease in net operating income. Net operating income. By

1b. Should the advertising budget be increased. Yes. No

2a. Refer to the original data. Management is considering using higher-quallty components that would increase the variable expense by $3 per unit. The marketing manager believes that the higher-quallty product would increase sales by 10% per month. Calculate the change in total contribution margin.

Total contribution margin. By. $

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