Data for Hermann Corporation are shown below:
|Per Unit||Percent of Sales|
Fixed expenses are $30,000 per month and the company is selling 2,000 units per month.
1-a. The marketing manager argues that a $5,000 increase in the monthly advertising budget would increase monthly sales by $9,000. Calculate the increase or decrease in net operating income.
Net operating income by
1-b. Should the advertising budget be increased?
Yes or No.