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Data for Hermann Corporation are shown below:

	Per Unit				Percent of Sales
Selling price	$	110				100	%
Variable expenses		77				70
Contribution margin	$	33				30	%

Fixed expenses are $82,000 per month and the company is selling 3,500 units per month.

Required:

1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $8,700 and monthly sales increase by $19,800?

1-b. Should the advertising budget be increased?

Complete this question by entering your answers in the tabs below.

• Req 1A
• Req 1B

How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $8,700 and monthly sales increase by $19,800? (Round any unit calculations up to the nearest whole unit.)

Net operating income

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