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Data for Hermann Corporation are shown below: Selling price Variable expenses Contribution margin Per Unit $ 85 51 $ 34 Percent of Sales 100% 60 40% Fixed expenses are $77,000 per month and the company is selling 2,600 units per month. Required: 1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $8,200, the monthly sales volume increases by 100 units, and the total monthly sales increase by $8,500? 1-b. Should the advertising budget be increased?

Data for Hermann Corporation are shown below: Selling price Variable expenses Contribution margin Per Unit $ 85 51 $ 34 Percent of Sales 100% 60 40% Fixed expenses are $77,000 per month and the company is selling 2,600 units per month. Required: 1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $8,200, the monthly sales volume increases by 100 units, and the total monthly sales increase by $8,500? 1-b. Should the advertising budget be increased?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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[The following information applies to the questions displayed below.) Data for Hermann Corporation are shown below: Selling price Variable expenses Contribution margin Per Unit $ 85 51 $34 Fixed expenses are $77,000 per month and the company is selling 2,600 units per month. Required: 1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $8,200, the monthly sales volume increases by 100 units, and the total monthly sales increase by $8,500? 1-b. Should the advertising budget be increased? Reg 1A Percent of Sales 100% 60 40% Complete this question by entering your answers in the tabs below. Reg 1B How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $8,200, the monthly sales volume increases by 100 units, and the total monthly sales increase by $8,500? (Do not round intermediate calculations.) Net operating income decreases by Reg 1A Req 1B >
Transcribed Image Text:[The following information applies to the questions displayed below.) Data for Hermann Corporation are shown below: Selling price Variable expenses Contribution margin Per Unit $ 85 51 $34 Fixed expenses are $77,000 per month and the company is selling 2,600 units per month. Required: 1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $8,200, the monthly sales volume increases by 100 units, and the total monthly sales increase by $8,500? 1-b. Should the advertising budget be increased? Reg 1A Percent of Sales 100% 60 40% Complete this question by entering your answers in the tabs below. Reg 1B How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $8,200, the monthly sales volume increases by 100 units, and the total monthly sales increase by $8,500? (Do not round intermediate calculations.) Net operating income decreases by Reg 1A Req 1B >
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