Question: Data for Hermann Corporation are shown below: Selling price Variable expenses Contribution margin Percent Per Unit of Sales $ 65 100% 39 60 $

Data for Hermann Corporation are shown below: Selling price Variable expenses Contributionmargin Percent Per Unit of Sales $ 65 100% 39 60 $

Data for Hermann Corporation are shown below: Selling price Variable expenses Contribution margin Percent Per Unit of Sales $ 65 100% 39 60 $ 26 40% Fixed expenses are $73,000 per month and the company is selling 4,300 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 $5 per unit and increase unit sales by 25%. 2-b. Should the higher-quality components be used?

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