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Accounting
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Data for Hermann Corporation are shown below:
Per Unit
Percent of Sales
Selling price
$ 105
100%
Variable expenses
63
60
Contribution margin
$ 42
40%
Fixed expenses are $81,000 per month and the company is selling 3,800 units per month.
Required:
1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $8,600, the monthly sales volume increases by 100 units, and the total monthly sales increase by $10,500?
net operating income decreases by how much
1-b. Should the advertising budget be increased?
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