Reference no: EM131257442
[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.
value: 10.00 points Required information
Required: 1-a. The marketing manager argues that a $8,200 increase in the monthly advertising budget would increase monthly sales by $16,000. Calculate the increase or decrease in net operating income.
b. Should the advertising budget be increased? Yes No
EasyLearning Objective: 03-04 Show the effects on net operating income of changes in variable costs, fixed costs, selling price, and volume. Check my work
value: 10.00 points
Required information
a. 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.
b. Should the higher-quality components be used? Yes No
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: The marketing manager argues that a $8,200 increase in the monthly advertising budget would increase monthly sales by $16,000. Calculate the increase or decrease in net operating income. EasyLearning Objective: 03-04 Show the effects on net operating..
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