Question: Data for Hermann Corporation are shown below: Selling price Variable expenses Contribution margin Per Unit $ 60 39 $ 21 Percent of Sales 100% 65


Data for Hermann Corporation are shown below: Selling price Variable expenses Contribution margin Per Unit $ 60 39 $ 21 Percent of Sales 100% 65 35% Fixed expenses are $72,000 per month and the company is selling 4,200 units per month. Exercise 2-5 (Algo) Part 2 2-a. 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? Complete this question by entering your answers in the tabs below. Reg 2A Req 2B 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 by Reg 2A Req 2B > Data for Hermann Corporation are shown below: Percent of Sales 100% Selling price Variable expenses Contribution margin Per Unit $ 60 39 $ 21 65 35% Fixed expenses are $72,000 per month and the company is selling 4,200 units per month. Exercise 2-5 (Algo) Part 2 2-a. 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? Complete this question by entering your answers in the tabs below. Req 2A Reg 2B Should the higher-quality components be used? OYes 10 No
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