1
answer
0
watching
225
views
28 Sep 2019
Data for Hermann Corporation areshown below:
Per Unit Percent
of Sales Selling price $ 125 100% Variableexpenses 80 64% Contributionmargin $ 45 36%
Fixed expenses are $85,000 permonth and the company is selling 2,700 units per month.
1.
Required information
Required: 1-a.
The marketing manager argues that a $9,000 increase in themonthly advertising budget would increase monthly sales by $20,000.Calculate the increase or decrease in net operating income.
1-b. Should theadvertising budget be increased? Yes No
References
WorksheetDifficulty: 1 EasyLearning Objective:05-04 Show the effects on net operating income of changes invariable costs, fixed costs, selling price, and volume.
Check my work
2.
Required information
2-a.
Refer to the original data. Management is considering usinghigher-quality components that would increase the variable expenseby $5 per unit. The marketing manager believes that thehigher-quality product would increase sales by 20% per month.Calculate the change in total contribution margin.
2-b. Should thehigher-quality components be used? Yes No
Data for Hermann Corporation areshown below: |
Per Unit | Percent of Sales | |||
Selling price | $ | 125 | 100% | |
Variableexpenses | 80 | 64% | ||
Contributionmargin | $ | 45 | 36% | |
Fixed expenses are $85,000 permonth and the company is selling 2,700 units per month. |
1.
Required information
Required: | |
1-a. | The marketing manager argues that a $9,000 increase in themonthly advertising budget would increase monthly sales by $20,000.Calculate the increase or decrease in net operating income. |
1-b. | Should theadvertising budget be increased? | ||||
|
References
WorksheetDifficulty: 1 EasyLearning Objective:05-04 Show the effects on net operating income of changes invariable costs, fixed costs, selling price, and volume.
Check my work
2.
Required information
2-a. | Refer to the original data. Management is considering usinghigher-quality components that would increase the variable expenseby $5 per unit. The marketing manager believes that thehigher-quality product would increase sales by 20% per month.Calculate the change in total contribution margin. |
2-b. | Should thehigher-quality components be used? | ||||
|
Deanna HettingerLv2
28 Sep 2019