Question: Data for Klauer Corporation are shown below: Per Unit Percent of Sales Selling price $ 90 100 % Variable expenses 63 70 Contribution margin $

Data for Klauer Corporation are shown below:

	Per Unit		Percent of Sales
Selling price	$	90		100	%
Variable expenses		63		70
Contribution margin	$	27		30	%

Fixed expenses are $78,000 per month and the company is selling 3,500 units per month.

rev: 06_04_2020_QC_CS-205709, 06_18_2020_QC_CS-216765, 07_14_2020_QC_CS-216765

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 20%.

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

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