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Topper Sports, Inc., 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
Topper Sports, Inc., 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: Standard Deluxe $ 40.00 $ 60.00 Pro $ 90.00 Selling price per racket Variable expenses per racket: Production Selling (54 of selling price) $ 22.00 $ 2.00 $ 27.80 $ 3.00 $31.50 $ 4.50 All sales are made through the company's own retail outlets. The Racket Division has the following fixed costs: Fixed production costs Advertising expense Administrative salaries Per Month $ 122,000 102,000 52,000 $ 276,000 Total Sales, in units, over the past two months have been as follows: April Standard Deluxe Pro Total 2,000 1,000 5,000 8,000 8,000 1,000 3,000 12,800 May Required: 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. Will the break-even point would be higher or lower with Moy's sales mix than with April's sales mix? 5. Assume that sales of the Standard rocket increase by $20,200. What would be the effect on net operating income? What would be the effect if Pro rocket sales increased by $20,200? Do not prepare income statements; use the incremental analysis approach in determining your
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