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Required information [The following information applies to the questions displayed below.] Data for Hermann Corporation are shown below: Selling price Variable expenses Contribution margin

Required information [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 $ 70 100% 49 $ 21 70 30% Fixed expenses are $74,000 per month and the company is selling 4,400 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-qu 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?

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