Calculate change in total contribution margin

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Reference no: EM13139977

Data for Herron Corporation are shown below:

Per Unit Percent
of Sales
Selling price $ 75 100%
Variable expenses 45 60%

Contribution margin $ 30 40%

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

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

Reference no: EM13139977

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