Required information Exercise 6-5 Changes in Variable Costs, Fixed Costs, Selling Price, and Volume (LO6-4] [The following information applies to the questions displayed below.] Data for Hermann Corporation are shown below: Selling price Variable expenses Per Unit $140 91 Percent of Sales 100% 65 Contribution margin $ 49 35% Fixed expenses are $88,000 per month and the company is selling 3,000 units per month.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Required information
Exercise 6-5 Changes in Variable Costs, Fixed Costs, Selling Price, and Volume (LO6-4]
[The following information applies to the questions displayed below.]
Data for Hermann Corporation are shown below:
Percent of
Sales
100%
65
Per Unit
Selling price
Variable expenses
$140
91
Contribution margin
$ 49
35%
Fixed expenses are $88,000 per month and the company is selling 3,000 units per month.
Transcribed Image Text:Required information Exercise 6-5 Changes in Variable Costs, Fixed Costs, Selling Price, and Volume (LO6-4] [The following information applies to the questions displayed below.] Data for Hermann Corporation are shown below: Percent of Sales 100% 65 Per Unit Selling price Variable expenses $140 91 Contribution margin $ 49 35% Fixed expenses are $88,000 per month and the company is selling 3,000 units per month.
Exercise 6-5 Part 2
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 $6 per unit and increase unit sales by 20%.
2-b. Should the higher-quality components be used?
Complete this question by entering your answers in the tabs below.
Req 2A
Req 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 $6 per unit and increase unit sales by 20%.
Net operating income
by
Req 2A
Req 2B
Transcribed Image Text:Exercise 6-5 Part 2 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 $6 per unit and increase unit sales by 20%. 2-b. Should the higher-quality components be used? Complete this question by entering your answers in the tabs below. Req 2A Req 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 $6 per unit and increase unit sales by 20%. Net operating income by Req 2A Req 2B
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