Question: Data for Hermann Corporation are shown below: Per Unit Percent of Sales Selling price $ 110 100% Variable expenses 77 70 Contribution margin $ 33

Data for Hermann Corporation are shown below:

	Per Unit	Percent of Sales
Selling price	$ 110	100%
Variable expenses	77	70
Contribution margin	$ 33	30%

Fixed expenses are $82,000 per month and the company is selling 3,500 units per month.

Required

1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $8,700 and the monthly sales volume increases by 100 units?

1-b. Should the advertising budget be increased?

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