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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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