Data for Hermann Corporation are shown below: Per Unit Percent
of Sales
Selling price $ 90 100 %
Variable expenses 63 70
Contribution margin $ 27 30 %

Fixed expenses are $30,000 per month and the company is selling 2,000 units per month.

2-a. Refer to the original data. However, in the text it is provided as "How much will net operating income increase (decrease) per month if the company uses higher-quality components that increase the variable expense by $2 per unit and increase unit sales by 10%.

2-b. Should the higher-quality components be used?