cost volume profit

EXERCISE Changes in Variable Costs, Fixed Costs, Selling Price, and Volume [LO4] Data for Moorenold Corporation are shown below: Per Unit Percentage of Sales Selling price ... Variable expenses $90 100% Contribution margin . . ...... 63 70% $27 30% Fixed expenses are $65,090 per month and the company is selling 2.750 units per month. Required: 1. The marketing manager argues that a $5,000 increase in the monthly advertising budget would increase monthly sales by $12,000. 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 $4 per unit. The marketing manager believes the higher- quality product would increase sales by 20% per month. Should the higher-quality components be used