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Data for Hermann Corporation are shown below: Selling price Variable expenses Contribution margin Percent of Per Unit $ 125 80 Sales 100% 64 $


Data for Hermann Corporation are shown below: Selling price Variable expenses Contribution margin Percent of Per Unit $ 125 80 Sales 100% 64 $ 45 36% Fixed expenses are $85,000 per month and the company is selling 2,700 units per month. 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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