Data for Hermann Corporation are shown below: Fixed expenses…
Data for Hermann Corporation are shown below:
Fixed expenses are $30,000 per month and the company is selling 2,000 units per month.Required:1. The marketing manager argues that a $5,000 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 per unit. The marketing manager believes the higher-quality product would increase sales by 10% per month. Should the higher-quality components beused?
