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Changes in Variable Costs Fixed Costs Selling Price and Volume Data for Herron Corporation are shown below Fixed expenses are $75000 per month and the company is selling 3000 units per

Changes in Variable Costs, Fixed Costs, Selling Price, and Volume

Data for Herron Corporation are shown below:

 

 

Fixed expenses are $75,000 per month and the company is selling 3,000 units per month.

Required:

1.       The marketing manager believes that an $8,000 increase in the monthly advertising budget would increase monthly sales by $15,000. 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 $3 per unit. The marketing manager believes that the higher-quality product would increase sales by 15% per month. Should the higher-quality components be used?

Jun 27 2020 View more View Less

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