Data for Hermann Corporation are shown below: Percent Per Unit of Sales $ 100 100% Selling price Variable expenses 61 61% Contribution margin $ 39 39% Fixed expenses are $80,000 per month and the company is selling 3,700 units per month. Exercise 5-5 Part 2 2-a. Refer to the original data. Management is considering using higher-quality components that would increase the variable expense 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. Total contribution margin by

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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100%
Data for Hermann Corporation are shown below:
Percent
Per Unit of Sales
$ 100
100%
Selling price
Variable expenses
61
61%
Contribution margin
$ 39
39%
Fixed expenses are $80,000 per month and the company is selling 3,700 units per
month.
Exercise 5-5 Part 2
2-a. Refer to the original data. Management is considering using higher-quality
components that would increase the variable expense 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.
Total contribution margin
by
Transcribed Image Text:Data for Hermann Corporation are shown below: Percent Per Unit of Sales $ 100 100% Selling price Variable expenses 61 61% Contribution margin $ 39 39% Fixed expenses are $80,000 per month and the company is selling 3,700 units per month. Exercise 5-5 Part 2 2-a. Refer to the original data. Management is considering using higher-quality components that would increase the variable expense 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. Total contribution margin by
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