Here is the data for Herron Corporation Per unit Sales ratio selling price $ 75 100 Variable expenses 45 60 Contribution margin $ 30 40 Fixed expenses are $ 75,000 per month and the company sells 3,000 units per month 1 The marketing manager believes that increasing the monthly budget by $ 8,000 wi...

Question 1 Net operating income decrease by 2 010 Workings Current break even point Fixed costs ...

Here is the data for Herron Corporation: Per unit Sales ratio selling price $ 75 100% Variable

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Here is the data for Herron Corporation:

	Per unit	Sales ratio
selling price	$ 75	100%
Variable expenses	45	60%
Contribution margin	$ 30	40%

Fixed expenses are $ 75,000 per month and the company sells 3,000 units per month.

1. The marketing manager believes that increasing the monthly budget by $ 8,000 will increase monthly sales by $ 15,000. Calculate the increase or decrease in net operating income.

2. The administration is considering using high quality components that increase the variable cost by $ 3 per unit. The marketing manager believes that a higher quality product will increase sales by 15% per month. Calculate the change in the total contribution margin.