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

Data for Hermann Corporation are shown below:

Per Unit Percent of Sales Selling price $ 60 100% Variable expenses 39 65% Contribution margin $ 21 35%

Fixed expenses are $72,000 per month and the company is selling 4,200 units per month.

4.value: 10.00 pointsRequired information Required:

1-a. The marketing manager argues that a $9,600 increase in the monthly advertising budget would increase monthly sales by $23,000. Calculate the increase or decrease in net operating income.

1-b. Should the advertising budget be increased?

Yes No HintsReferenceseBook & Resources Hint #1 Check my work

5.value: 10.00 pointsRequired information 2-a. Refer to the original data. Management is considering using higher-quality components that would increase the variable expense by $4 per unit. The marketing manager believes that the higher-quality product would increase sales by 25% per month. Calculate the change in total contribution margin.

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

Yes No