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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 $ 85

[The following information applies to the questions displayed below.] Data for Hermann Corporation are shown below: Per Unit Percent of Sales Selling price $ 85 100 % Variable expenses 51 60 Contribution margin $ 34 40 % Fixed expenses are $77,000 per month and the company is selling 2,600 units per month Required: 1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $8,200 and monthly sales increase by $15,300? 1-b. Should the advertising budget be increased?

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