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How much will net operating income increase

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Reference no: EM133029440

Problem - Data for Hermann Corporation are shown below:

 

Per Unit

Percent of Sales

Selling price

$90

100%

Variable expenses

63

70

Contribution margin

$27

30%

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

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?

Reference no: EM133029440

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