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, the monthly sales volume increases by 100 units, and the total monthly sales increase by $7,000?

1-b. Should the advertising budget be increased or decreased and by how much?

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.

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%.

2-b. Should the higher-quality components be used?

Mauro Products distributes a single product, a woven basket whose selling price is $21 per unit and whose variable expense is $18 per unit. The companys monthly fixed expense is $5,100.

Required:

1. Calculate the companys break-even point in unit sales.

2. Calculate the companys break-even point in dollar sales. (Do not round intermediate calculations.)

3. If the company's fixed expenses increase by $600, what would become the new break-even point in unit sales? In dollar sales? (Do not round intermediate calculations.)

1. Break-even point in unit sales		baskets
2. Break-even point in dollar sales
3. Break-even point in unit sales		baskets
3. Break-even point in dollar sales

Lin Corporation has a single product whose selling price is $140 per unit and whose variable expense is $70 per unit. The companys monthly fixed expense is $32,350.

Required:

1. Calculate the unit sales needed to attain a target profit of $7,900. (Do not round intermediate calculations.)

2. Calculate the dollar sales needed to attain a target profit of $8,500. (Round your intermediate calculations to the nearest whole number.)

1. Units sales to attain target profit		units
2. Dollar sales to attain target profit

Molander Corporation is a distributor of a sun umbrella used at resort hotels. Data concerning the next months budget appear below:

Selling price per unit	$ 29
Variable expense per unit	$ 16
Fixed expense per month	$ 11,180
Unit sales per month	1,010

Required:

1. What is the companys margin of safety? (Do not round intermediate calculations.)

2. What is the companys margin of safety as a percentage of its sales? (Round your percentage answer to 2 decimal places (i.e. .1234 should be entered as 12.34).)

1. Margin of safety (in dollars)
2. Margin of safety percentage		%