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The following information applies to the questions displayed below Data for Hermann Corporation are shown below Per Unit $ 80 Selling price Variable expenses Contribution margin of Sales 100% 55% 45% $ 36 Fixed expenses are $76,000 per month and the company is selling 2,500 units per month2-a. Refer to the original data. Management is considering usinghigher-quality components that would increase the varlable expense by $4 per unit. The marketing manager belleves that the higher-quality product would increase saes by 20% per month. Calculate the change in total contribution margin. I contribution maig in increasos

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The answer has been presented in the supporting sheet. In the given question first contribution has been calculated at existing contribution and sales. For new total contribution sales and contribution were revised and then it was calculated. The difference between the new and old contribution is actually increase in total contribution that is $6000 or in percentage 6.66%. Please see the detailed answer in the supporting sheet.

DATE PAGE Na eR Umiti So Tatal Comtrib 字ラ rer万 91.mex.c* ed Quality Crowpmw (High 6.ud, h3〉 a) ub Vewiable Cest csillimcraoke bu . Selling Paice - Reviled Vassia ble Cast 3 2 2500 5o meu erd Contrib 0o

DATE PAGE No erm New 9ba00 串600 0 聿h

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