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Homework answers / question archive / Data for Herron Corporation are shown below:     Per Unit Percent of Sales Selling price $ 130   100% Variable expenses   78   60%           Contribution margin $ 52   40%               Fixed expenses are $86,000 per month and the company is selling 2,800 units per month

Data for Herron Corporation are shown below:     Per Unit Percent of Sales Selling price $ 130   100% Variable expenses   78   60%           Contribution margin $ 52   40%               Fixed expenses are $86,000 per month and the company is selling 2,800 units per month

Accounting

Data for Herron Corporation are shown below:

 

  Per Unit Percent
of Sales
Selling price $ 130   100%
Variable expenses   78   60%
         
Contribution margin $ 52   40%
         
 

 

Fixed expenses are $86,000 per month and the company is selling 2,800 units per month.

22.

value:
2.50 points

Required information

Required:

1-a.

The marketing manager believes that an $9,100 increase in the monthly advertising budget would increase monthly sales by $20,500. Calculate the increase or decrease in net operating income.

   

 

1-b. Should the advertising budget be increased?
   
 
  No
  Yes

rev: 11_26_2013_QC_41283

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23.

value:
2.50 points

Required information

2-a.

Refer to the original data. Management is considering using higher-quality components that would increase the variable cost by $6 per unit. The marketing manager believes that the higher-quality product would increase sales by 15% per month. Calculate the change in total contribution margin.

   

 

2-b. Should the higher-quality components be used?
   
 
  Yes
  No

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