Exercise 5-5 Changes in Variable Costs, Fixed Costs, Selling Price, and Volume The following information apples to the questions displayed below Data for Hermann Corporation are shown below: Percent of Sales 100% 70% Per Unit $ 90 Selling price Variable expenses 63 Contribution margin $ 27 30% Fixed expenses are $30,000 per month and the company is selling 2,000 units per month. Exercise 5-5 Part 1 Required: 1-a. The marketing manager argues that a $5,000 increase in the monthly advertising budget would increase monthly sales by $9,000. Calculate the increase or decrease in net operating income. et operating income 1-b. Should the advertising budget be increased ? O Yes O No Exercise 5-5 Part 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. Calculate the change in total contribution margin. 2-a. otal contribution margin 2-b. Should the higher-quality components be used? O Yes O No