Data for Hermann Corporation are shown below: Per Unit Percent of Sales Selling price $ 80 100% Variable expenses 44 55 Contribution margin $ 36 45% Fixed expenses are $76,000 per month and the company is selling 2,500 units per month. Exercise 6-5 (Algo) Part 1 Required: 1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $8,100, the monthly sales volume increases by 100 units, and the total monthly sales increase by $8,000? 1-b. Should the advertising budget be increased?
Data for Hermann Corporation are shown below: Per Unit Percent of Sales Selling price $ 80 100% Variable expenses 44 55 Contribution margin $ 36 45% Fixed expenses are $76,000 per month and the company is selling 2,500 units per month. Exercise 6-5 (Algo) Part 1 Required: 1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $8,100, the monthly sales volume increases by 100 units, and the total monthly sales increase by $8,000? 1-b. Should the advertising budget be increased?
Chapter3: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 5EA: Maple Enterprises sells a single product with a selling price of $75 and variable costs per unit of...
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Data for Hermann Corporation are shown below:
| Per Unit | Percent of Sales | |
|---|---|---|
| Selling price | $ 80 | 100% |
| Variable expenses | 44 | 55 |
| Contribution margin | $ 36 | 45% |
Fixed expenses are $76,000 per month and the company is selling 2,500 units per month.
Exercise 6-5 (Algo) Part 1
Required:
1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $8,100, the monthly sales volume increases by 100 units, and the total monthly sales increase by $8,000?
1-b. Should the advertising budget be increased?
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