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Required information Skip to question [The following information applies to the questions displayed below.] Data for Hermann Corporation are shown below: Per Unit Percent of

Required information

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[The following information applies to the questions displayed below.]

Data for Hermann Corporation are shown below:

Per Unit Percent of Sales
Selling price $ 80 100%
Variable expenses 52 65
Contribution margin $ 28 35%

Fixed expenses are $76,000 per month and the company is selling 4,600 units per month.

Required:

1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $10,000, the monthly sales volume increases by 100 units, and the total monthly sales increase by $8,000?

1-b. Should the advertising budget be increased?

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