Data for Hermann Corporation are shown below: Fixed expenses are $75,000 per mon

Question

Data for Hermann Corporation are shown below:

Fixed expenses are $75,000 per month and the company is selling 4,000 units per month.

Required:

1-a. The marketing manager argues that a $9,900 increase in the monthly advertising budget would increase monthly sales by $24,500. Calculate the increase or decrease in net operating income.

1-b. Should the advertising budget be increased?

Per Unit Percent of Sales Selling price $ 75 100 % Variable expenses 51 68 Contribution margin $ 24 32 % Complete this question by entering your answers in the tabs below. Req 1A Req 1B The marketing manager argues that a $9,900 increase in the monthly advertising budget would increase monthly sales by $24,500. Calculate the increase or decrease in net operating income. (Do not round intermediate calculations.) Net operating income by

Explanation / Answer

1 Increase(decrease) in net operating income = (24500*32%)-9900= $(2060) Net operating income decreases by $2060 2 No

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