Data for Hermann Corporation are shown below. Selling price Variable expenses Contribution margin Per Unit $ 90 Percent of Sales 100% 63 70 $ 27 30% Fixed expenses are $30,000 per month and the company is selling 2,000 units per month. 2-a. Refer to the original data. How much will net operating income increase (decrease) per month if the company uses higher-quality components that increase the variable expense by $2 per unit and increase unit sales by 10%. 2-b. Should the higher-quality components be used? Complete this question by entering your answers in the tabs below. Required 2A Required 2B Refer to the original data. How much will net operating income increase (decrease) per month if the company uses higher- quality components that increase the variable expense by $2 per unit and increase unit sales by 10%. Net operating income increases by
Data for Hermann Corporation are shown below. Selling price Variable expenses Contribution margin Per Unit $ 90 Percent of Sales 100% 63 70 $ 27 30% Fixed expenses are $30,000 per month and the company is selling 2,000 units per month. 2-a. Refer to the original data. How much will net operating income increase (decrease) per month if the company uses higher-quality components that increase the variable expense by $2 per unit and increase unit sales by 10%. 2-b. Should the higher-quality components be used? Complete this question by entering your answers in the tabs below. Required 2A Required 2B Refer to the original data. How much will net operating income increase (decrease) per month if the company uses higher- quality components that increase the variable expense by $2 per unit and increase unit sales by 10%. Net operating income increases by
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Data for Hermann Corporation are shown below.
Selling price
Variable expenses
Contribution margin
Per Unit
$ 90
Percent of
Sales
100%
63
70
$ 27
30%
Fixed expenses are $30,000 per month and the company is selling 2,000 units per month.
2-a. Refer to the original data. How much will net operating income increase (decrease) per month if the company uses higher-quality
components that increase the variable expense by $2 per unit and increase unit sales by 10%.
2-b. Should the higher-quality components be used?
Complete this question by entering your answers in the tabs below.
Required 2A
Required 2B
Refer to the original data. How much will net operating income increase (decrease) per month if the company uses higher-
quality components that increase the variable expense by $2 per unit and increase unit sales by 10%.
Net operating income
increases
by
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