Question: Required information Exercise 6-5 (Algo) Changes in Variable Costs, Fixed Costs, Selling Price, and Volume [LO6-4] [The following information applies to the questions displayed

Required information Exercise 6-5 (Algo) Changes in Variable Costs, Fixed Costs, Selling

Required information Exercise 6-5 (Algo) Changes in Variable Costs, Fixed Costs, Selling Price, and Volume [LO6-4] [The following information applies to the questions displayed below.] Data for Hermann Corporation are shown below: Percent Per Unit of Sales Selling price Variable expenses Contribution margin $ 65 39 $ 26 100% 60 40% Fixed expenses are $73,000 per month and the company is selling 4,300 units per month. Exercise 6-5 (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 $5 per unit and increase unit sales by 25%. 2-b. Should the higher-quality components be used?

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