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Category > Accounting Posted 22 May 2017 My Price 6.00

Data for Herron Corporation are shown below

 

Data for Herron Corporation are shown below:

    Per Unit Percent
of Sales
  Selling price    $ 60       100%
  Variable expenses   39         65%
         
  Contribution margin    $ 21         35%
         
 

Fixed expenses are $72,000 per month and the company is selling 4,200 units per month.

a.The marketing manager believes that an $9,600 increase in the monthly advertising budget would increase monthly sales by $23,000. Calculate the increase or decrease in net operating income.

  
b.

Refer to the original data. Management is considering using higher-quality components that would increase the variable cost by $4 per unit. The marketing manager believes that the higher-quality product would increase sales by 25% per month. Calculate the change in total contribution margin.
   
 
 
 

Answers

Alpha Geek
(8)
Status NEW Posted 22 May 2017 11:05 AM My Price 6.00

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file 1495454085-Answer.docx preview (182 words )
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