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Compute how much net operating income increase per month

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Reference no: EM132586165

Data for Hermann Corporation are shown below:

Per Unit Percent of Sales

Selling price                $90            100%

Variable expenses           63               70

Contribution margin          $27           30%

Fixed expenses are $30,000 per month and the company is selling 2,000 units per month.

Required:

Question a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $5,000 and monthly sales increase by $9,000?

Question b. Should the advertising budget be increased?

Reference no: EM132586165

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