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 $70.00 Deluxe $ 106.00 Pro $ 160.00 $ 42.00 $ 3.50 $ 53.00 $ 5.30 $ 64.00 $ 8.00 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 $ 160,000 140,000 90,000 $ 390,000 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. 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 $24,000. What would be the effect on net operating income? What would be the effect if Pro racket sales increased by $24,000? Do not prepare income statements; use the incremental analysis 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 $70.00 Deluxe $ 106.00 Pro $ 160.00 $ 42.00 $ 3.50 $ 53.00 $ 5.30 $ 64.00 $ 8.00 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 $ 160,000 140,000 90,000 $ 390,000 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. 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 $24,000. What would be the effect on net operating income? What would be the effect if Pro racket sales increased by $24,000? Do not prepare income statements; use the incremental analysis
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