Exercise $6-5($Static$)$ Changes in Variable Costs, Fixed Costs, Selling Price, and Volume $[$LO$6-4]$

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Data for Hermann Corporation are shown below:

Per Unit Percent of Sales

Selling price $ $90100\%$

Variable expenses $6370$

Contribution margin $ $2730\%$

Fixed expenses are $$30,000$ per month and the company is selling $2,000$ units per month.

Exercise $6-5($Static$)$ Part $1$

Required:

$1-$a$.$ How much will net operating income increase $($decrease$)$ per month if the monthly advertising budget increases by $$5,000,$ the monthly sales volume increases by $100$ units, and the total monthly sales increase by $$9,000?$

$1-$b$.$ Should the advertising budget be increased?!

Required information

Exercise $6-5($Static$)$ Changes in Variable Costs, Fixed Costs, Selling Price, and Volume $[$LO$6-4]$

$[$The following information applies to the questions displayed below.$]$

Data for Hermann Corporation are shown below:

Fixed expenses are $$30,000$ per month and the company is selling $2,000$ units per month.

Exercise $6-5($Static$)$ Part $1$

Required:

$1-$a$.$ How much will net operating income increase $($decrease$)$ per month if the monthly advertising budget increases by $$5,000,$ the

monthly sales volume increases by $100$ units, and the total monthly sales increase by $$9,000?$

$1-$b$.$ Should the advertising budget be increased?

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Req $1B$

How much will net operating income increase $($decrease$)$ per month if the monthly advertising budget increases by $$5,000,$

the monthly sales volume increases by $100$ units, and the total monthly sales increase by $$9,000?$