Topper Sports, Incorporated, produces high-quality sports equipment. The company's Racket Division manufactures three tennis rackets-the Standard,...

 

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Topper Sports, Incorporated, produces high-quality sports equipment. The company's Racket Division manufactures three tennis rackets-the Standard, the Deluxe, and the Pro-that are widely used in amateur play. Selected information on the rackets is given below: Selling price per racket Variable expenses per racket: Production Selling (5% of selling price) Standard $ 60.00 Deluxe $ 90.00 Pro $ 100.00 $ 36.00 $ 3.00 $ 45.00 $ 4.50 $ 36.00 $ 5.00 All sales are made through the company's own retail outlets. The Racket Division has the following fixed costs: Fixed production costs Per Month $136,000 116,000 66,000 Advertising expense Administrative salaries Total $ 318,000 Sales, in units, over the past two months have been as follows: April May Required: Standard Deluxe Pro Total 2,000 1,000 5,000 8,000 8,000 1,000 3,000 12,000 1-a. Prepare contribution format income statements for April. 1-b. Prepare contribution format income statements for May. 3. Compute the Racket Division's break-even point in dollar sales for April. 4. Would the break-even point be higher or lower with May's sales mix than with April's sales mix? 5. Assume that sales of the Standard racket increase by $21,600. What would be the effect on net operating income? What would be the effect if Pro racket sales increased by $21,600? Do not prepare income statements; use the incremental analysis approach in determining your answer. Topper Sports, Incorporated, produces high-quality sports equipment. The company's Racket Division manufactures three tennis rackets-the Standard, the Deluxe, and the Pro-that are widely used in amateur play. Selected information on the rackets is given below: Selling price per racket Variable expenses per racket: Production Selling (5% of selling price) Standard $ 60.00 Deluxe $ 90.00 Pro $ 100.00 $ 36.00 $ 3.00 $ 45.00 $ 4.50 $ 36.00 $ 5.00 All sales are made through the company's own retail outlets. The Racket Division has the following fixed costs: Fixed production costs Per Month $136,000 116,000 66,000 Advertising expense Administrative salaries Total $ 318,000 Sales, in units, over the past two months have been as follows: April May Required: Standard Deluxe Pro Total 2,000 1,000 5,000 8,000 8,000 1,000 3,000 12,000 1-a. Prepare contribution format income statements for April. 1-b. Prepare contribution format income statements for May. 3. Compute the Racket Division's break-even point in dollar sales for April. 4. Would the break-even point be higher or lower with May's sales mix than with April's sales mix? 5. Assume that sales of the Standard racket increase by $21,600. What would be the effect on net operating income? What would be the effect if Pro racket sales increased by $21,600? Do not prepare income statements; use the incremental analysis approach in determining your answer.