Question: Data for Hermann Corporation are shown below: Per Unit Percent of Sales Selling price $ 70 100 % Variable expenses 49 70 Contribution margin $

Data for Hermann Corporation are shown below:

	Per Unit		Percent of Sales
Selling price	$	70		100	%
Variable expenses		49		70
Contribution margin	$	21		30	%

Fixed expenses are $74,000 per month and the company is selling 4,400 units per month.

Required:

1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $9,800 and monthly sales increase by $24,000?

1-b. Should the advertising budget be increased?

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