Question: Data for Hermann Corporation are shown below: Per Unit Percent of Sales Selling price $ 135 100 % Variable expenses 81 60 Contribution margin $

Data for Hermann Corporation are shown below:

	Per Unit		Percent of Sales
Selling price	$	135		100	%
Variable expenses		81		60
Contribution margin	$	54		40	%

Fixed expenses are $87,000 per month and the company is selling 2,900 units per month.

Exercise 6-5 Part 1

Required:

1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $9,200 and monthly sales increase by $21,000?

1-b. Should the advertising budget be increased?

Should the advertising budget be increased?

Yes []

No []

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