Question: Data for Hermann corporation are shown below: Per unit Percent of sales Selling price 90 100 Variable expenses 63 70 Contribution margin 27 30 Fixed

Data for Hermann corporation are shown below:

	Per unit	Percent of sales
Selling price	90	100
Variable expenses	63	70
Contribution margin	27	30

Fixed expenses are $30,000 per month and the company is selling 2000 units per month.

Refer to the original data. How much will net operating income increase(decrease) per month if the company uses higher quality components that increase the variable expense by $2 per unit and increae unit sales by 10%

Should the higher quality components be used?

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