Question

In: Accounting

Data for Hermann Corporation are shown below: Per Unit Percentage of Sales Sales price $90 100...

Data for Hermann Corporation are shown below:

Per Unit

Percentage of Sales

Sales price

$90

100

Less: Variable expenses

  63

  70

Contribution margin

$27

  30

Fixed expenses are $40,000 per month, and the company is selling 2,000 units per month.

Required:

1. The marketing manager argues that a $4,000 increase in the monthly advertising budget would increase monthly sales by $9,000. Should the advertising budget be increased?
2. Refer to the original data. Management is considering using higher-quality components that would increase the variable cost by $2.00 per unit. The marketing manager believes the higher-quality product would increase sales by 10% per month. Should the higher-quality components be used?

Solutions

Expert Solution

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

Data for Hermann Corporation are shown below Per Unit Percent of Sales Selling price $ 80...
Data for Hermann Corporation are shown below Per Unit Percent of Sales Selling price $ 80 100 % Variable expenses 44 55 Contribution margin $ 36 45 % Fixed expenses are $76,000 per month and the company is selling 2,500 units per month. 2-a. Refer to the original data. How much will net operating income increase (decrease) per month if the company uses higher-quality components that increase the variable expense by $4 per unit and increase unit sales by 20%....
Data for Hermann Corporation are shown below: Per Unit Percent of Sales Selling price $ 110...
Data for Hermann Corporation are shown below: Per Unit Percent of Sales Selling price $ 110 100 % Variable expenses 77 70 Contribution margin $ 33 30 % Fixed expenses are $82,000 per month and the company is selling 3,500 units per month. Exercise 6-5 Part 2 2-a. Refer to the original data. How much will net operating income increase (decrease) per month if the company uses higher-quality components that increase the variable expense by $5 per unit and increase...
Data for Jim's Landscaping are shown below: Per Unit % of Sales Selling Price $600 100%...
Data for Jim's Landscaping are shown below: Per Unit % of Sales Selling Price $600 100% Variable Expenses $390 65 % Contribution Margin $210 35 % Fixed Expenses are $500,000 per month and the company is selling 5,000 units per month. 7) The marketing manager believes that a $54,000 increase in the monthly advertising budget would increase monthly sales by 250 units (a 5% increase in sales). Should the advertising budget be increased? Yes or no? SHOW YOUR WORK 8)...
[The following information applies to the questions displayed below.] Data for Hermann Corporation are shown below:...
[The following information applies to the questions displayed below.] Data for Hermann Corporation are shown below:   Per Unit Percent of Sales   Selling price    $ 140 100%   Variable expenses 91   65%   Contribution margin    $ 49   35%     Fixed expenses are $88,000 per month and the company is selling 3,000 units per month. Required: 1-a. The marketing manager argues that a $9,300 increase in the monthly advertising budget would increase monthly sales by $21,500. Calculate the increase or decrease in net operating...
[The following information applies to the questions displayed below.] Data for Hermann Corporation are shown below:...
[The following information applies to the questions displayed below.] Data for Hermann Corporation are shown below:   Per Unit Percent of Sales   Selling price    $ 80 100%   Variable expenses 44   55%   Contribution margin    $ 36   45%     Fixed expenses are $76,000 per month and the company is selling 2,500 units per month. 2. value: 1.25 points Required information Required: 1-a. The marketing manager argues that a $8,100 increase in the monthly advertising budget would increase monthly sales by $15,500. Calculate the...
Sales price per unit for product X is $90. The variable costs per unit and total...
Sales price per unit for product X is $90. The variable costs per unit and total fixed costs are as follows:          Variable costs per unit:                                  Fixed costs:                Machining                                  $25               Depreciation                   $ 40,000                Packaging                                    15               Maintenance                       31,000                Total variable                             $40               Cleaning                              9,000 Real estate tax                     5,000 Total fixed                   $85,000 Using Contribution Margin technique, calculate Sales Revenue and Sales Units at Break-Even point. (b)   If the current level of sales is 2,300 units, by what percentage can sales decrease before the...
1.A company has provided the following data:   Sales 12,000 units   Sales price $100 per unit   Variable...
1.A company has provided the following data:   Sales 12,000 units   Sales price $100 per unit   Variable cost $50 per unit   Fixed cost $300,000             If the dollar contribution margin per unit is increased by 10%, total fixed cost is decreased by 20%, and all other factors remain the same, by how much will net income increase? 2.   Hamada Company sells a single product. The product has a selling price of $100 per unit and variable expenses of 80% of sales. If the...
    Per Unit .       % of sales Selling price . $75 . 100% Variable Expenses ....
    Per Unit .       % of sales Selling price . $75 . 100% Variable Expenses . $45 . 60% Contribution Margin . $30 40% Fixed expenses are $75,000 per month and the company is selling 3,000 units per month. 2. Refer to the original data . Management is considering using higher quality components that would increase variable cost by $3 per unit. The manager believes that the higher quality product would increase sales by 15% per month. Should the higher...
Per unit data concerning a product manufactured by XYZ Co. are given below: Selling price $100...
Per unit data concerning a product manufactured by XYZ Co. are given below: Selling price $100 Direct materials, direct labor, and variable manufacturing overhead 40 Fixed manufacturing overhead 25 Variable selling expense 10 Fixed selling and administrative expense 7 The above per unit data are based on annual production of 10,000 units. The company has received a special, one-time-only order for 500 units of the product with a selling price of $60. There would be no variable selling expense on...
Whirly corporation most recent income statement is shown below: Total Per Unit Sales (7,600 units) 243,200...
Whirly corporation most recent income statement is shown below: Total Per Unit Sales (7,600 units) 243,200 32.00 Variable Expenses 144,400 19.00 Contribution Margin 98,800 Fixed Expenses 55,300 Net Operating Income 43,500 Required: Prepare a new contribution format income statement under each of the following conditions (consider each case independently): 1. The sales volume increases by 60 units 2. The Sales Volume decreases by 60 units 3. The Sales Volume is 6,600
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT