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Accounting

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Data for Hermann Corporation are shown below:
Per Unit Percent of Sales
Selling price $ 125100%
Variable expenses 8064
Contribution margin $ 4536%
Fixed expenses are $85,000 per month and the company is selling 2,700 units per month.
2-a. Refer to the original data. How much will net operating income increase (decrease) per month if the company uses higher-quality components that increase the variable expense by $5 per unit and increase unit sales by 20%.
2-b. Should the higher-quality components be used? Yes or No?

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