Question: Data for Hermann Corporation are shown below: Per Unit Percent of Sales Selling price $ 80 100% Variable expenses 44 55 Contribution margin $ 36

Data for Hermann Corporation are shown below: Per Unit Percent of Sales Selling price $ 80 100% Variable expenses 44 55 Contribution margin $ 36 45% Fixed expenses are $76,000 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 $8,100, the monthly sales volume increases by 100 units, and the total monthly sales increase by $8,000?

1-b. Should the advertising budget be increased?

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