Answer:-1-a)- The net operating income will decrease by $500 per month if advertising budget increase by $9500 and monthly sale increases by $22500.
1-b)-No--Advertising budget should not be increased
Explanation:-
Hermann Corporation | ||
Operating income | ||
Current Situation | ||
Particulars | Amount | |
$ | ||
Sales | 4100 unit*$55 per unit | 225500 |
Less:- Variable cost | 4100 unit*$33 per unit | 135300 |
Contribution | 90200 | |
Less:- Fixed costs | 71000 | |
Net operating income | 19200 | |
Hermann Corporation | ||
Operating income | ||
Proposed Situation | ||
Particulars | Amount | |
$ | ||
Sales | (4100 unit*$55 per unit)+$22500 | 248000 |
Less:- Variable cost | $248000*60% | 148800 |
Contribution | 99200 | |
Less:- Fixed costs | 71000 | |
Less:- Advertising expenses | 9500 | |
Net operating income | 18700 | |
1)-The net operating income will decrease per month by $500 (ie-$19200-$18700). | ||
2)-The advertising budget should not be increased due to decrease in net operating income of $500. |
Required information The following information applies to the questions displayed below.) Data for Hermann Corporation are...
! Required information [The following information applies to the questions displayed below.) Data for Hermann Corporation are shown below: Selling price Variable expenses Contribution margin Per Unit $ 85 51 $ 34 Percent of Sales 100% 60 40 Fixed expenses are $77,000 per month and the company is selling 2.600 units per month. Required: 1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $8,200 and monthly sales increase by $15,300? 1-b....
Required information [The following information applies to the questions displayed below.] Data for Hermann Corporation are shown below: Selling price Variable expenses Contribution margin Per Unit $ 140 91 Percent of Sales 100% 65 35% $ 49 Fixed expenses are $88,000 per month and the company is selling 3,000 units per month. Required: 1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $9,300 and monthly sales increase by $21,000? 1-b. Should...
Required information (The following information applies to the questions displayed below.) Data for Hermann Corporation are shown below: Selling price Variable expenses Contribution margin Percent Per Unit of Sales $ 90 1005 63 70 $ 27 30% Fixed expenses are $30,000 per month and the company is selling 2,000 units per month. Required: 1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $5,000, the monthly sales volume increases by 100 units,...
[The following information applies to the questions displayed below.] Data for Hermann Corporation are shown below. Percent of Sales 100% Selling price Variable expenses Contribution margin Per Unit $130 78 $ 52 60 40% Fixed expenses are $86,000 per month and the company is selling 2,800 units per month Required: 1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $9,100 and monthly sales increase by $20,500? 1-b. Should the advertising budget...
Required information [The following information applies to the questions displayed below.) Data for Hermann Corporation are shown below: Percent of Sales 100% 60 Per Unit $ 135 81 $ 54 Selling price Variable expenses Contribution margin 40% Fixed expenses are $87,000 per month and the company is selling 2,900 units per month. Required: 1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $9,200 and monthly sales increase by $21,000? 1-b. Should...
Required information [The following information applies to the questions displayed below.] Data for Hermann Corporation are shown below: Percent of Per Unit Sales Selling price Variable expenses $135 100% 60 81 Contribution margin $ 54 40% Fixed expenses are $87,000 per month and the company is selling 2,900 units per month. Required: 1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $9,200 and monthly sales increase by $21,000? 1-b. Should the...
Required information [The following information applies to the questions displayed below.] Data for Hermann Corporation are shown below: Per Unit $ 110 Percent of Sales 100% Selling price Variable expenses Contribution margin 77 70 in $ 33 30% Fixed expenses are $82,000 per month and the company is selling 3,500 units per month. Required: 1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $8,700 and monthly sales increase by $18,500? 1-b....
Required information [The following information applies to the questions displayed below.) Data for Hermann Corporation are shown below: Percent of Sales 100% Selling price Variable expenses Contribution margin Per Unit $ 90 63 $ 27 70 30% Fixed expenses are $78,000 per month and the company is selling 3,500 units per month. Required: 1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $8,300 and monthly sales increase by $16,500? 1-b. Should...
! Required information The following information applies to the questions displayed below.) Data for Hermann Corporation are shown below: Selling price Variable expenses Contribution margin Per Unit $ 85 51 $ 34 Percent of Sales 100% 60 404 Fixed expenses are $77,000 per month and the company is selling 2,600 units per month Required: 1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $8,200 and monthly sales increase by $15,300? 1-b....
Required information (The following information applies to the questions displayed below.) Data for Hermann Corporation are shown below: Selling price Variable expenses Contribution margin Per Unit $ 110 77 $ 33 Percent of Sales 100% 70 30% Fixed expenses are $82,000 per month and the company is selling 3,500 units per month. Required: 1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $8,700 and monthly sales increase by $18,500? 1-b. Should...