Ques 1:

Required information

Data for Hermann Corporation are shown below:

	Per Unit	Percent of Sales
Selling price	$ 55	100%
Variable expenses	33	60
Contribution margin	$ 22	40%

Fixed expenses are $71,000 per month and the company is selling 4,100 units per month.

1-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%.

1-b. Should the higher-quality components be used?

Ques 2:

Mauro Products distributes a single product, a woven basket whose selling price is $29 per unit and whose variable expense is $23 per unit. The companys monthly fixed expense is $16,800.

Required:

1. Calculate the companys break-even point in unit sales.

2. Calculate the companys break-even point in dollar sales. (Do not round intermediate calculations.)

3. If the company's fixed expenses increase by $600, what would become the new break-even point in unit sales? In dollar sales? (Do not round intermediate calculations.)