Question: Data for Hermann Corporation are shown below: Per Unit Percent of Sales Selling price $ 75 100% Variable expenses 51 68% Contribution margin $ 24
| Data for Hermann Corporation are shown below: |
| Per Unit | Percent of Sales | |||
| Selling price | $ | 75 | 100% | |
| Variable expenses | 51 | 68% | ||
| Contribution margin | $ | 24 | 32% | |
| Fixed expenses are $75,000 per month and the company is selling 4,000 units per month |
Refer to the original data. Management is considering using higher-quality components that would increase the variable expense by $4 per unit. The marketing manager believes that the higher-quality product would increase sales by 25% per month. Calculate the change in total contribution margin.
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