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 $ 90 63 $ 27 Percent of Sales 100% 70 30% Fixed expenses are $30,000 per month and the company is selling 2,000 units per month. equired: -a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $5,000, the monthly sales volume increases by 100 units, and the total monthly sales increase by $9,000? -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 $ 90 63 $ 27 Percent of Sales 100% 70 30% Fixed expenses are $30,000 per month and the company is selling 2,000 units per month. equired: -a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $5,000, the monthly sales volume increases by 100 units, and the total monthly sales increase by $9,000? -b. Should the advertising budget be increased?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
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![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
$ 90
63
$ 27
Fixed expenses are $30,000 per month and the company is selling 2,000 units per month.
Required:
1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $5,000, the
monthly sales volume increases by 100 units, and the total monthly sales increase by $9,000?
1-b. Should the advertising budget be increased?
Req 1A-
Percent
of Sales
100%
70
30%
Complete this question by entering your answers in the tabs below.
Req 1B
How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $5,000,
the monthly sales volume increases by 100 units, and the total monthly sales increase by $9,000?
Net operating income
by](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc176d2ba-90fa-400e-a5e9-9bf06e84331b%2F53db8952-81f6-472c-9ff7-e9d845a5bc6e%2Fxkouuda_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
$ 90
63
$ 27
Fixed expenses are $30,000 per month and the company is selling 2,000 units per month.
Required:
1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $5,000, the
monthly sales volume increases by 100 units, and the total monthly sales increase by $9,000?
1-b. Should the advertising budget be increased?
Req 1A-
Percent
of Sales
100%
70
30%
Complete this question by entering your answers in the tabs below.
Req 1B
How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $5,000,
the monthly sales volume increases by 100 units, and the total monthly sales increase by $9,000?
Net operating income
by
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