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Required information Exercise 5-5 (Algo) Changes in Variable Costs, Fixed Costs, Selling Price, and Volume [LO5-4] [The following information applies to the questions displayed

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Required information Exercise 5-5 (Algo) Changes in Variable Costs, Fixed Costs, Selling Price, and Volume [LO5-4] [The following information applies to the questions displayed below] Data for Hermann Corporation are shown below: Selling price Variable expenses Contribution margin Percent of Per Unit $ 60 39 5 21 Sales 100% 65 354 Fixed expenses are $72,000 per month and the company is selling 4,200 units per month. Exercise 5-5 (Algo) 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 25%. 2-b. Should the higher-quality components be used?

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