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Required information [The following information applies to the questions displayed below.] Data for Hermann Corporation are sComplete this question by entering your answers in the tabs below. Req 2A Req 2B How much will net operating income increase

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Answer #1
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Unit sales 2900 (2900*1.2)=3480
Sales (2900*135)=391500 (3480*135)=469800
Variable expenses (2900*81)=234900 3480*(81+5)=299280
Contribution margin 156600 170520
Fixed expenses 87000 87000
Net operating income 69600 83520

Hence Net operating income increases by =(83520-69600)=$13920

Hence higher quality components should be used.

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