Question: Data for Hermann Corporation are shown below: Per Unit Percent of Sales Selling price $ 115 100% Variable expenses 69 60 Contribution margin $ 46

Data for Hermann Corporation are shown below:

	Per Unit	Percent of Sales
Selling price	$ 115	100%
Variable expenses	69	60
Contribution margin	$ 46	40%

Fixed expenses are $83,000 per month and the company is selling 2,500 units per month.

Required:

1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $8,800, the monthly sales volume increases by 100 units, and the total monthly sales increase by $11,500?

1-b. Should the advertising budget be increased?

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