Question: Data for Hermann Corporation are shown below: Per Unit Percent of Sales Selling price $ 125 100% Variable expenses 80 64% Contribution margin $ 45

Data for Hermann Corporation are shown below: Per Unit Percent of Sales Selling price $ 125 100% Variable expenses 80 64% Contribution margin $ 45 36% Fixed expenses are $85,000 per month and the company is selling 2,700 units per month. 1-a. The marketing manager argues that a $9,000 increase in the monthly advertising budget would increase monthly sales by $20,000. Calculate the increase or decrease in net operating income. Net operating Income decrease by ? 2-a. Refer to the original data. Management is considering using higher-quality components that would increase the variable expense by $5 per unit. The marketing manager believes that the higher-quality product would increase sales by 20% per month. Calculate the change in total contribution margin. Total Contribution margin increase by ?

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