Data for Hermann Corporation are shown below:

Precent

Per unit of sales

selling price $ 55 100%

Variable expenses 33 60%

_____________________________

Contribution margin $ 33 40%

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

required:

1-a. the marketing manager argues that a $9,500 increase in the monthly advertising budget would increase monthly sales by $22,500. Calculate the increase or decrease in net operating income.

Net operating income ______________ by _________________-

1-b. Should the advertising budget be increased?

6. 2-a. Refer to the original data. Management is considering using higher-quality components that would increase the variable expense by 44 per unit. The marketing manager believes that the higher-quality roduct would increase sales by 25% per month. Calculate the change in total contributin margin.

Total contribution margin __________ by ________.

2-b. should the higher-quality components be used? yes_______ No______.