BRIEF EXERCISE 8-3 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 Less Variable expenses 63 70 Contribution margin $27 30 Fixed expenses are $40,000 per month, and the company is selling 2,000 units per month Required: M 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 used