Required information [The following information applies to the questions displayed below.] Data for Hermann Corporation are shown below: Selling price Variable expenses Contribution margin Per Unit Percent of Sales $ 50 28 100% 56 - $ 22 44% Fixed expenses are $70,000 per month and the company is selling 4,000 units per month. Required: 1-a. How much will net operating Income increase (decrease) per month if the monthly advertising budget increases by $11,000, the monthly sales volume increases by 100 units, and the total monthly sales increase by $5,000? 1-b. Should the advertising budget be increased?
Required information [The following information applies to the questions displayed below.] Data for Hermann Corporation are shown below: Selling price Variable expenses Contribution margin Per Unit Percent of Sales $ 50 28 100% 56 - $ 22 44% Fixed expenses are $70,000 per month and the company is selling 4,000 units per month. Required: 1-a. How much will net operating Income increase (decrease) per month if the monthly advertising budget increases by $11,000, the monthly sales volume increases by 100 units, and the total monthly sales increase by $5,000? 1-b. Should the advertising budget be increased?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
a
![Required information
[The following information applies to the questions displayed below.]
Data for Hermann Corporation are shown below:
Selling price
Variable expenses
Contribution margin
Per Unit
Percent of
Sales
$ 50
28
100%
56
- $ 22
44%
Fixed expenses are $70,000 per month and the company is selling 4,000 units per month.
Required:
1-a. How much will net operating Income increase (decrease) per month if the monthly advertising budget increases by $11,000, the
monthly sales volume increases by 100 units, and the total monthly sales increase by $5,000?
1-b. Should the advertising budget be increased?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc48780b6-6248-4276-8248-bd118d5e39d4%2F2f7e2213-2d2e-4803-af3e-09d26e40d4e7%2F0gsx7mc_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Required information
[The following information applies to the questions displayed below.]
Data for Hermann Corporation are shown below:
Selling price
Variable expenses
Contribution margin
Per Unit
Percent of
Sales
$ 50
28
100%
56
- $ 22
44%
Fixed expenses are $70,000 per month and the company is selling 4,000 units per month.
Required:
1-a. How much will net operating Income increase (decrease) per month if the monthly advertising budget increases by $11,000, the
monthly sales volume increases by 100 units, and the total monthly sales increase by $5,000?
1-b. Should the advertising budget be increased?
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