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?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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?

 

Data for Hermann Corporation are shown below:
Selling price
Variable expenses
Contribution margin
Percent
Per Unit of Sales
$ 90
100%
63
70
$ 27
30%
Fixed expenses are $30,000 per month and the company is selling 2,000 units per month.
Transcribed Image Text:Data for Hermann Corporation are shown below: Selling price Variable expenses Contribution margin Percent Per Unit of Sales $ 90 100% 63 70 $ 27 30% Fixed expenses are $30,000 per month and the company is selling 2,000 units per month.
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