EXERCISE $3-5$ Changes in Variable Costs, Fixed Costs, Selling Price, and Volume $[$LO $3-4]$ Data for Herron Corporation are shown below:

Fixed expenses are $$75,000$ per month and the company is selling $3,000$ units per month. Required:

The marketing manager believes that an $$8,000$ increase in the monthly advertising budget would increase monthly sales by $$15,000.$ Should the advertising budget be increased?

Refer to the original data. Management is considering using higher$-$quality components it would increase the variable cost by $$3$ per unit. The marketing manager believes that the higher$-$quality product would increase sales by $15\%$ per month. Should the higher$-$quality components be used?