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.

Total contribution margin increases by $ ??

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