Question: Data for Hermann Corporation are shown below: Per Unit Percent of Sales Selling price $ 55 100% Variable expenses 33 60 Contribution margin $ 22

Data for Hermann Corporation are shown below:

	Per Unit	Percent of Sales
Selling price	$ 55	100%
Variable expenses	33	60
Contribution margin	$ 22	40%

Fixed expenses are $71,000 per month and the company is selling 4,100 units per month.

Exercise 6-5 (Algo) Part 2

2-a. Refer to the original data. How much will net operating income increase (decrease) per month if the company uses higher-quality components that increase the variable expense by $4 per unit and increase unit sales by 25%.

Net operating income (increases/decreases) by (?)

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