Answer Happy

Exercise 6-5 (Algo) Changes in Variable Costs, Fixed Costs, Selling Price, and Volume [LO6-4] [The following information applies to the questions displayed below] Data for Hermann Corporation are shown below: Selling price Variable expenses Contribution margin Fixed expenses are $75,000 per month and the company is selling 4,000 units per month. Exercise 6-5 (Algo) Part 1 Percent Per Unit of Sales $75 51 100% 68 $ 24 32% Required: 1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $9,900, the monthly sales volume increases by 100 units, and the total monthly sales increase by $7,500? 1-b. Should the advertising budget be increased? Complete this question by entering your answers in the tabs below. Req 1A Req 18 Should the advertising budget be increased? Yos No < Req 1A Req 18 > CH

2 s Selling price Variable expenses Contribution margin Fixed expenses are $75,000 per month and the company is selling 4,000 units per month. Exercise 6-5 (Algo) Part 1 Percent Per Unit of Sales $75 100% 51 68 $ 24 32% Required: 1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $9,900, the monthly sales volume increases by 100 units, and the total monthly sales increase by $7,500? 1-b. Should the advertising budget be increased? Complete this question by entering your answers in the tabs below. Req 1A Req 18 How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $9,900, the monthly sales volume increases by 100 units, and the total monthly sales increase by $7,500? (Do not round intermediate calculations.) Net operating income by Reg 1A Req 18 >