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Required information [The following information applies to the questions displayed below.] Data for Hermann Corporation are shown below: Percent of Sales 100% Selling price Variable

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Required information [The following information applies to the questions displayed below.] Data for Hermann Corporation are shown below: Percent of Sales 100% Selling price Variable expenses Contribution margin Per Unit $ 85 51 $ 34 60 40% Fixed expenses are $77,000 per month and the company is selling 2,600 units per month 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? 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 $5 per unit and increase unit sales by 20%. Net operating income IR Regga Reg 2B > increases decreases Reg 2A Req 2B Should the higher-quality components be used? ) Yes No

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