Question

Required information (The following information applies to the questions displayed below.) Data for Hermann Corporation are shown below: Percent of Sales 100% Per Unit $ 80 44 $ 36 Selling price Variable expenses Contribution margin 55 45% Fixed expenses are $76,000 per month and the company is selling 2,500 units per month. Required: 1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $8,100 and monthly sales increase by $15,500? 1-b. Should the advertising budget be increased? Complete this question by entering your answers in the tabs below. Req 1A Reg 1B How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $8,100 and monthly sales increase by $15,500? (Do not round intermediate calculations.) Net operating income decreases by $ 1,125 < Req 1A Req 1B >
PLEASE ANSWERS ALL PARTS OF THE QUESTION

Answer 1

Answer-

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From the above solution, it is clear that operating income will increase if the advertisement budget and monthly sales will be increased. so if the sales will be increased also by an increase in advertisement budget then it is beneficial for the company.