Question: Data from Hermann Corporation are shown below: Selling price Variable expenses Contribution margin Per Unit $90 63 $27 Percentage of sales 100% 70 30% Fixed
Data from Hermann Corporation are shown below: Selling price Variable expenses Contribution margin Per Unit $90 63 $27 Percentage of sales 100% 70 30% Fixed expenses are $30,000 per month and the company is selling 2,000 units per month Required 1. The marketing manager argues that a 55,000 increase in the monthly advertising budget would increase to monthly sales by 59,000, should the advertising budget by increased? 2. Refer to the original data. Management is considering using higher-quality components that would increase the variable expense by $2 per unit. The marketing manager believes that the higher-quality product would increase sales by 10% per month. Should the higher-quality components be used
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
