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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

[The following information applies to the questions displayed below.]
Data for Hermann Corporation are shown below:
Per Unit Percent of Sales
Selling price $ 80100%
Variable expenses 4455
Contribution margin $ 3645%
Fixed expenses are $76,000 per month and the company is selling 2,500 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?

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