Data for Herron Corporation are shown below:
Per Unit Percent of Sales
Selling price $ 75 100%
Variable expenses 45 60%
Contribution margin $ 30 40%
Fixed expenses are $75,000 per month and the company is selling 3,000 units per month.
Management is considering using higher-quality components that would increase the variable cost by $3 per unit. The marketing manager believes that the higher-quality product would increase sales by 15% per month. Calculate the change in total contribution margin.