Required information Exercise 6-5 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 Per Unit $ 90 63 $ 27 Percent of Sales 1009 70 304 Fixed expenses are $78,000 per month and the company is selling 3,500 units per month Exercise 6-5 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? Complete this question by entering your answers in the tabs below. Reg 2A Reg 2B 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%. Net operating income Required information Exercise 6-5 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 nargin Per Unit $ 90 63 $ 27 Percent of Sales 100% 70 304 Fixed expenses are $78,000 per month and the company is selling 3,500 units per month. Exercise 6-5 Part 2 2-a. Refer to the original data. How much wil 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? Complete this question by entering your answers in the tabs below. Req 2A Rec20 Should the higher-quality components be used? OYes ONO Exercise 6-6 Break-Even Analysis (L06-5) Mauro Products distributes a single product, a woven basket whose selling price is $11 per unit and whose variable expense is $8 per unit. The company's monthly fixed expense is $3,000 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 sales 2. Break-even point in dollar sales 3. Break-even point in unit sales Break-even point in dollar sales baskets Exercise 6-2 Prepare a Cost-Volume-Profit (CVP) Graph (L06-2] Karlik Enterprises distributes a single product whose selling price is $28 per unit and whose variable expense is $22 per unit. The company's monthly fixed expense is $24,000. Required: 2. Calculate the company's break-even point in unit sales. Unit sales to break even units
