Question
[The following information applies to the questions displayed below.] Data for Hermann Corporation are shown below: Per Unit Percent of Sales Selling price $ 125
[The following information applies to the questions displayed below.] Data for Hermann Corporation are shown below:
Per Unit Percent of Sales Selling price $ 125 100%
Variable expenses 80 64% Contribution margin $ 45 36%
Fixed expenses are $85,000 per month and the company is selling 2,700 units per month.
Refer to the original data. Management is considering using higher-quality components that would increase the variable expense by $5 per unit. The marketing manager believes that the higher-quality product would increase sales by 20% per month. Calculate the change in total contribution margin. |
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