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Required information Exercise 6-5 (Algo) Changes in Variable Costs, Fixed Costs, Selling Price, and Volume (LO6-4] [The following information applies to the questions displayed below.)

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Required information Exercise 6-5 (Algo) Changes in Variable Costs, Fixed Costs, Selling Price, and Volume (LO6-4] [The following information applies to the questions displayed below.) Data for Hermann Corporation are shown below: Percent of Sales 100% 65 Per Unit $ 120 78 $ 42 Selling price Variable expenses Contribution margin 35% Fixed expenses are $84,000 per month and the company is selling 2,600 units per month. Exercise 6-5 (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 $5 per unit and increase unit sales by 20%. 2-b. Should the higher-quality components be used

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