Topic: Changes in Variable Costs, Fixed Costs, Selling Price, and Volume Data for Herron Corporation 1 answer below »

Topic: Changes in Variable Costs, Fixed Costs, Selling Price, and Volume Data for Herron Corporation are shown below: Per Unit Percent
of Sales   Selling price $ 60 100%         Variable expenses 42 70%         Contribution margin $ 18 30%       Fixed expenses are $74,500 per month and the company is selling 4,200 units per month. (Input the amount as a positive value. Do not round intermediate calculations. Round your answer to 2 decimal places.) Required: (Show detailed work process)

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The marketing manager believes that an $7,400 increase in the monthly advertising budget would increase monthly sales by $16,200. Calculate the increase or decrease in net operating income.   Net operating income     Decreases or Increases by: $ ________ Should the advertising budget be increased ? _____________

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 13% per month. Calculate the change in total contribution margin.   Total contribution margin increaes/decreases by $ _______ Should the higher-quality components be used? ___________