Topper Sports, Incorporated, produces high-quality sports equipment. The companys Racket Division manufactures three tennis racketsStandard, Deluxe, and Prowidely used in amateur play. Selected information on the rackets is given below:

StandardDeluxeProSelling price per racket$ 55.00$ 86.00$ 125.00Variable expenses per racket:Production$ 33.00$ 43.00$ 45.00Selling (5% of selling price)$ 2.75$ 4.30$ 6.25

All sales are made through the companys own retail outlets. The Racket Division has the following fixed costs:

Per MonthFixed production costs$ 144,000Advertising expense124,000Administrative salaries74,000Total$ 342,000

Sales, in units, over the past two months were as follows:

StandardDeluxeProTotalApril2,0001,0005,0008,000May8,0001,0003,00012,000

Required:

1-a. Prepare contribution format income statements for April.

1-b. Prepare contribution format income statements for May.

3. Compute the Racket Divisions break-even point in dollar sales for April.

4. Will the break-even point be higher or lower with Mays sales mix than with Aprils sales mix?

5. Assume that sales of the Standard racket increase by $22,400. What would be the effect on net operating income? What would be the effect if Pro racket sales increased by $22,400? Do not prepare income statements; use the incremental analysis approach in determining your answer.