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Topper Sports, Incorporated, produces high-quality sports equipment. I ne company's Kacket Division manufactures three tennis rackets-the Standard, the Deluxe, and the Pro-that are widely used
Topper Sports, Incorporated, produces high-quality sports equipment. I ne company's Kacket 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 $ 45.00 Deluxe $ 70.00 Pro $ 100.00 $ 27.00 $ 2.25 $ 35.00 $ 3.50 $ 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 Advertising expense Administrative salaries Total Per Month $ 140,000 120,000 70,000 $ 330,000 Sales, in units, over the past two months have been as follows: April May Standard 2,000 Deluxe Pro Total 1,000 5,000 8,000 1,000 8,000 3,000 12,000 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 May's sales mix than with April's sales mix? 5. Assume that sales of the Standard racket increase by $22,000. What would be the effect on net operating income? What would be the effect if Pro racket sales increased by $22,000? Do not prepare income statements; use the incremental analysis approach in determining your answer Prepare contribution format income statements for April. (Round "Total percent" answers to 1 decimal place) Topper Sports, Incorporated Sales Variable expenses: Production Selling Income Statement for April Standard Deluxe Pro Total Amount % Amount % Amount % Amount % $ 90,000 100 $70,000 100 $ 500,000 100 $ 660,000 100 54,000 40 35,000 50 180,000 64 269,000 59.2 4,500 5 3,500 5 25,000 5 33,000 5.0 Total variable expenses 58,500 45 38,500 55 $ 31,500 55 $31,500 45 $ 205,000 295,000 69 302,000 64.2 31 $ 358,000 35.8 Fixed expenses: Production Advertising Administrative Total fixed expenses Net operating income 0 $ 358,000 Prepare contribution format income statements for May. (Round "Total percent" answers to 1 decimal place) Topper Sports, Incorporated Income Statement for May Variable expenses: Total Standard Deluxe Pro Amount % Amount % Amount % Amount % Total variable expenses 0 0 0 0 0 0 0.0 $ 0 0 $ 0 0 $ 0 0 $ 0 0.0 Fixed expenses: Total fixed expenses $ 0 Compute the Racket Division's break-even point in dollar sales for April. (Round intermediate percentage calculations to 1 decimal place and final answer to the nearest whole dollar.) Break-even point in dollar sales Assume that sales of the Standard racket increase by $22,000. What would be the effect on net operating income? What would be the effect if Pro racket sales increased by $22,000? Do not prepare income statements; use the incremental analysis approach in determining your answer. Effect on Net operating income Standard Pro
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