Question: Data for Hermann Corporation are shown below: Per Unit Percent of Sales Selling price $ 65 100% Variable expenses 39 60 Contribution margin $ 26

Data for Hermann Corporation are shown below:

	Per Unit	Percent of Sales
Selling price	$ 65	100%
Variable expenses	39	60
Contribution margin	$ 26	40%

Fixed expenses are $73,000 per month and the company is selling 4,300 units per month.

Required:

1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $9,700, the monthly sales volume increases by 100 units, and the total monthly sales increase by $6,500?

1-b. Should the advertising budget be increased?

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