Data for Herron Corporation are shown below: Per Unit Percent of Sales Selling price $ 50 100% Variable expenses 40 80% Contribution margin $ 10 20% Fixed expenses are $74,300 per month and the company is selling 3,000 units per month.1.value: 5.00 points
Required:
1a. The marketing manager believes that an $8,600 increase in the monthly advertising budget would increase monthly sales by $13,000. Calculate the increase or decrease in net operating income. (Input the amount as a positive value. Omit the "tiny_mce_markerquot; sign in your response.) Net operating income by $ 1b. Should the advertising budget be increased ? No Yes check my workeBook LinkView Hint #1references 2.value: 5.00 points
2a. Management is considering using higher-quality components that would increase the variable cost by $5 per unit. The marketing manager believes that the higher-quality product would increase sales by 17% per month. Calculate the change in total contribution margin. (Input the amount as a positive value. Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the "tiny_mce_markerquot; sign in your response.) Total contribution margin by $ 2b. Should the higher-quality components be used?