Exercise 5-4 (Algo) Computing and using the CM Ratio (L05-3) Last month when Holiday Creations, Inc., sold 42,000 units, total sales were $168,000, total variable expenses were $129,360, and fixed expenses were $39,400. Required: 1. What is the company's contribution margin (CM) ratio? 2. What is the estimated change in the company's net operating income if it can increase sales volume by 550 units and total sales by $2,200? (Do not round intermediate calculations.) % 1. Contribution margin ratio 2. Estimated change in net operating income Required information Exercise 5-5 (Algo) Changes in Variable Costs, Fixed Costs, Selling Price, and Volume (LO5-4) (The following information applies to the questions displayed below.) 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 5-5 (Algo) Part 2 -a. Refer to the original data. How much will net operating income increase (decrease) per month if the company uses higher-quality omponents that increase the variable expense by $4 per unit and increase unit sales by 25% --b. Should the higher-quality components be used? Complete this question by entering your answers in the tabs below. Reg 2A Req 2B 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 25%. Net operating income by RG2A Req 2B > Required information Exercise 5-5 (Algo) Changes in Variable Costs, Fixed Costs, Selling Price, and Volume (LO5-4) (The following information applies to the questions displayed below.) Data for Hermann Corporation are shown below: Selling price Variable expenses Contribution margin Per Unit $ 60 39 $ 21 Percent of Sales 1008 65 35 Fixed expenses are $72,000 per month and the company is selling 4,200 units per month. Exercise 5-5 (Algo) Part 2 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 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 Should the higher-quality components be used? Yes No