[The following information applies to the questionsdisplayed below.]
Data for Herron Corporation areshown below:
Per Unit Percent
of Sales Selling price $ 70 100% Variableexpenses 56 80% Contributionmargin $ 14 20%
Fixed expenses are $74,300 permonth and the company is selling 4,600 units per month.(Input the amount as a positive value. Do not roundintermediate calculations. Round your answer to 2 decimalplaces.)
References
eBook & Resources
Section BreakExercise 5-5 Changes in VariableCosts, Fixed Costs, Selling Price, and Volume [LO4]
5.
value:
0.76 points
Required information
Exercise 5-5 Part 1
Required: 1a.
The marketing manager believes that an $8,700 increase in themonthly advertising budget would increase monthly sales by $13,400.Calculate the increase or decrease in net operating income.
Net operatingincome (Click toselect)decreasesincreases by $
1b. Should the advertising budget beincreased ? No Yes
Hints
References
eBook & Resources
Hint #1
Check my work
6.
value:
0.76 points
Required information
Exercise 5-5 Part 2
2a.
Management is considering using higher-quality components thatwould increase the variable cost by $5 per unit. The marketingmanager believes that the higher-quality product would increasesales by 14% per month. Calculate the change in total contributionmargin.
Total contributionmargin (Click to select)decreasesincreases by $
2b. Should the higher-qualitycomponents be used? Yes No
[The following information applies to the questionsdisplayed below.] |
Data for Herron Corporation areshown below: |
Per Unit | Percent of Sales | |||
Selling price | $ | 70 | 100% | |
Variableexpenses | 56 | 80% | ||
Contributionmargin | $ | 14 | 20% | |
Fixed expenses are $74,300 permonth and the company is selling 4,600 units per month.(Input the amount as a positive value. Do not roundintermediate calculations. Round your answer to 2 decimalplaces.) |
References
eBook & Resources
Section BreakExercise 5-5 Changes in VariableCosts, Fixed Costs, Selling Price, and Volume [LO4]
5.
value:
0.76 points
Required information
Exercise 5-5 Part 1
Required: | |
1a. | The marketing manager believes that an $8,700 increase in themonthly advertising budget would increase monthly sales by $13,400.Calculate the increase or decrease in net operating income. |
Net operatingincome | (Click toselect)decreasesincreases by | $ |
1b. | Should the advertising budget beincreased ? | ||||
|
Hints
References
eBook & Resources
Hint #1
Check my work
6.
value:
0.76 points
Required information
Exercise 5-5 Part 2
2a. | Management is considering using higher-quality components thatwould increase the variable cost by $5 per unit. The marketingmanager believes that the higher-quality product would increasesales by 14% per month. Calculate the change in total contributionmargin. |
Total contributionmargin (Click to select)decreasesincreases by | $ |
2b. | Should the higher-qualitycomponents be used? | ||||
|