Question: 1) Data for Hermann Corporation are shown below: Per Unit Percent of Sales Selling price $ 110 100 % Variable expenses 77 70 Contribution margin

1) Data for Hermann Corporation are shown below:

	Per Unit		Percent of Sales
Selling price	$	110		100	%
Variable expenses		77		70
Contribution margin	$	33		30	%

Fixed expenses are $82,000 per month and the company is selling 3,500 units per month.

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%.

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