Proposing Changes in Variable Costs, Fixed Costs, Selling Price, and Volume [LO2- CC5)...
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Proposing Changes in Variable Costs, Fixed Costs, Selling Price, and Volume [LO2- CC5) Data for Hermann Corporation are shown below. Per Unit Percentage of Sales Sales price $90 100 63 170 Less: Variable expenses Contribution margin $22 30 Fixed expenses are $40,000 per month, and the company is selling 2.000 units per month Required: 1. The marketing manager argues that a $4,000 increase in the monthly advertising budget would increase monthly sales by $9.000 Should the advertising budget be increased? 2. Refer to the original data Management is considering using higher quality components that would increase the variable cost by $2.00 per unit. The marketing manager believes the higher quality product would increase sales by 10% per month. Should the higher quality components be nised
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