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

Data for Hermann Corporation are shown below:

Per Unit Percent of SalesSelling

price $105 100%

Variable expenses 63 60

Contribution margin $42 40%

Fixed expenses are $81,000 per month and the company is selling 3,800 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 $4 per unit and increase unit sales by 20%.

2-b. Should the higher-quality components be used?