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(ine following information applies to the questions displayed below.) Data for Hermann Corporation are shown below: Percent Per Unit of Sales Selling price Variable
(ine following information applies to the questions displayed below.) Data for Hermann Corporation are shown below: Percent Per Unit of Sales Selling price Variable expenses Contribution margin $105 63 100% 60 $ 42 40% Fixed expenses are $81,000 per month and the company is selling 3,800 units per month. Exercise 5-5 Part 2 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 $4 per unit and increase unit sales by 20%. 2-b. Should the higher-quality components be used?
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