Dominion Sports, Inc., produces high-quality sports equipment. The company's Racket Division manufactures three tennis rackets-the Standard, the Deluxe, and the Professional-that are widely used in amateur play. Selected information on the rackets is given below: Standard Deluxe Professional Selling price per racket $40.00 $60.00 $90.00 Variable expenses per racket: Production $22.00 $27.00 $31.50 Selling (5% of the selling price) $2.00 $3.00 $4.50 All sales are made through the company's retail outlets. The Racket Division has the following fixed costs: Fixed production costs Advertising expense Administrative salaries Total Sales, in units, over the past two months have been as follows: Per Month $120,000 100,000 50,000 $270,000 Standard Deluxe Professional Total August 2,000 1,000 5,000 8,000 September 8,000 1,000 3,000 12,000 Required: 1. Prepare contribution format income statements for August and September. Use the following headings: [6 Marks] Sales Etc. Standard Deluxe Professional Total Amount % Amount % Amount % Amount % 2. Upon seeing the income statements in (1) above, the president stated, "I can't believe this! We sold 50% more rackets in September than in August, yet profits went down. It's obvious that costs are out of control in that division." What other explanation can you give for the drop in net operating income? [4 Marks] 3. Compute the Racket Division's break-even point in dollar sales and Margin of Safety for August. 12 Marks] 4. Compute the number of units Dominion Sports need to sell to break even of each product. 14 Marks] 5. The Marketing department believes that by increasing the advertising expense to $150,000 in September, it can increase sales of each product by 15%, would you suggest this increase in advertising expense, and why? 14 Marks] 6. Assume that sales of the Standard racket increase by $20,000. What would be the effect on net operating income? What would be the effect if Professional racket sales increased by $20,000? 15 Marks]