Last month, when Holiday Creations, Inc sold 50,000 units, total sales were $200,000, total variable expenses were $120,000, and total fixed expenses were $65,000 What is the company's CM ratio Estimate the change in the company's net income if it were to increase its total sales by $1,100 BRIEF EXERCISE 8 3 Proposing Changes in Variable Costs, Fixed Costs, Selling Price, and Volume LO2 CC5 Data for Hermann Corporation are shown below Per Unit Percentage of Sales Sales price $90 100 Less Variable expenses 63 70 Contribution margin $27 30 Fixed expenses are $40,000 per month, and the company is selling 2,000 units per month The marketing manager argues that a $4,000 increase in the monthly advertising budget would increase monthly sales by $9,000 Should the advertising budget be increased Refer to the original data Management is considering using higher quality components that would increase the variable cost by $2 00 per unit The marketing manager believes the higher quality product would increase sales by 10 per month Should the higher quality components be used

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Posted on Jun 28, 2024

Last month, when Holiday Creations, Inc. sold 50,000 units, total sales were $200,000, total variable expenses were $120,000, and total fixed expenses were $65,000. What

Last month, when Holiday Creations, Inc. sold 50,000 units, total sales were $200,000, total variable expenses were $120,000, and total fixed expenses were $65,000.

What is the company's CM ratio?
Estimate the change in the company's net income if it were to increase its total sales by $1,100.

BRIEF EXERCISE 8-3

Proposing Changes in Variable Costs, Fixed Costs, Selling Price, and Volume[LO2-CC5]

Data for Hermann Corporation are shown below:

Per Unit

Percentage of Sales

Sales price

$90

100

Less: Variable expenses

Contribution margin

$27

Fixed expenses are $40,000 per month, and the company is selling 2,000 units per month.

The marketing manager argues that a $4,000 increase in the monthly advertising budget would increase monthly sales by $9,000. Should the advertising budget be increased?
Refer to the original data. Management is considering using higher-quality components that would increase the variable cost by $2.00 per unit. The marketing manager believes the higher-quality product would increase sales by 10% per month. Should the higher-quality components be used?