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Required information [The following information applies to the questions displayed below.] Data for...

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Accounting

Required information
[The following information applies to the questions displayed below.]
Data for Hermann Corporation are shown below:
Fixed expenses are $85,000 per month and the company is selling 2,700 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 $5 per unit and increase unit sales by 20%.
2-b. Should the higher-quality components be used?
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Req 2A
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 unit sales by 20%.
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