1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $9,000, the monthly sales volume increases by 100 units, and the total monthly sales increase by $12,500? 1-b. Should the advertising budget be increased?

FINANCIAL ACCOUNTING
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Author:Libby
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Chapter1: Financial Statements And Business Decisions
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[The following information applies to the questions displayed below.]
Data for Hermann Corporation are shown below:
Percent of
Sales
Per Unit
$ 125
100%
Selling price
Variable expenses
80
64
Contribution margin
$45
36%
Fixed expenses are $85,000 per month and the company is selling 2,700 units per month.
Required:
1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $9,000, the
monthly sales volume increases by 100 units, and the total monthly sales increase by $12,500?
1-b. Should the advertising budget be increased?
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Transcribed Image Text:5- X + o.mheducation.com e 05 i Saved Help Required information [The following information applies to the questions displayed below.] Data for Hermann Corporation are shown below: Percent of Sales Per Unit $ 125 100% Selling price Variable expenses 80 64 Contribution margin $45 36% Fixed expenses are $85,000 per month and the company is selling 2,700 units per month. Required: 1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $9,000, the monthly sales volume increases by 100 units, and the total monthly sales increase by $12,500? 1-b. Should the advertising budget be increased? Complete this question by entering your answers in the tabs below. < Prev of 10 Next > ... 00
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