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: Selling price Variable expenses Contribution margin Percent Per Unit of Sales $ 50 1009 28 56 $ 22 44% Fixed expenses are $70,000 per month and the company is selling 4,000 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 $4 per unit and increase unit sales by 25%. 2-b. Should the higher-quality components be used? Complete this question by entering your answers in the tabs below. Req 2A Reg 28 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%. Net operating incomo by Required information Exercise 6-5 (Algo) Changes in Variable Costs, Fixed Costs, Selling Price, and Volume (L06-4) {The following information applies to the questions displayed below.] Data for Hermann Corporation are shown below: Selling price Variable expenses Contribution margin Percent Per Unit of Sales $ 50 100% 28 56 $ 22 44% Fixed expenses are $70,000 per month and the company is selling 4,000 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 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? Complete this question by entering your answers in the tabs below. Req 2A Jeg 2B Reg 28 Should the higher-quality components be used? Yes No Exercise 6-6 (Algo) Break-Even Analysis (L06-5) Mauro Products distributes a single product, a woven basket whose selling price is $27 per unit and whose variable expense is $20 per unit. The company's monthly foxed expense is $15,400. Required: 1. Calculate the company's break-even point in unit sales. 2. Calculate the company's break-even point in dollar sales. (Do not round intermediate calculations.) 3. If the company's fixed expenses increase by $600, what would become the new break-even point in unit sales? In dollar sales? (DO not round intermediate calculations.) baskets 1. Break-even point in unit salos 2. Break-even point in dollar sales 3. Break-even point in unit sales 3. Break-even point in dollar sales baskets Exercise 6-7 (Algo) Target Profit Analysis (L06-6) Lin Corporation has a single product whose selling price is $135 per unit and whose variable expense is $81 per unit. The company's monthly fixed expense is $23.580. Required: 1. Calculate the unit sales needed to attain a target profit of $4,500. (Do not round intermediate calculations.) 2. Calculate the dollar sales needed to attain a target profit of $9,500 (Round your intermediate calculations to the nearest whole number.) units 1. Units sales to attain target profit 2. Dolar sales to attain target profit
