Homework Chapter S Help Save & Ex 3 Exercise 5-5 Changes in Variable Costs, Fixe
ID: 2537507 • Letter: H
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Homework Chapter S Help Save & Ex 3 Exercise 5-5 Changes in Variable Costs, Fixed Costs, Selling Price, and Volume [LOS-4] /The following information applies to he questions displayed below Data for Hemann Corporation are shown below Fixed expenses are $74,000 per month and the company is selling 4,400 units per month Exercise 5-5 Part 1 l-a. The markeing manager argues that a $9.800 increase in the monthly advertising budget would increase monthly sales by $24.000. Calculahe the increase or decrease in net operating income. Should the advertising budget be increased? Complete this question by entering your answers in the tabs below The marketing manager arques that a $9,8o0 increase in the menthly advertising budget would increase monthly sales by 24,000. Calculate the increase or decrease in net operating inceme. (De eot round intermediate calculations)Explanation / Answer
1A) Increase in Net operating Income
Increase in sales = $24,000
Increase in Contribution margin = $24000*0.3 = $7,200
Decrease in net operating income = $9800 - $7,200 = $1,600
1.b) Advertising budget should not be increased.
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