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Data for Hermann Corporation are shown below:

	Per Unit			Percent of Sales
Selling price	$	55		100%
Variable expenses		33		60%
Contribution margin	$	22		40%

Fixed expenses are $71,000 per month and the company is selling 4,100 units per month.

1-a.

The marketing manager argues that a $9,500 increase in the monthly advertising budget would increase monthly sales by $22,500. Calculate the increase or decrease in net operating income.

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.