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

StandardDeluxeProSelling price per racket$ 60.00$ 90.00$ 100.00Variable expenses per racket: Production$ 36.00$ 45.00$ 36.00Selling (5% of selling price)$ 3.00$ 4.50$ 5.00

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

Per MonthFixed production costs$ 134,000Advertising expense114,000Administrative salaries64,000Total$ 312,000

Sales, in units, over the past two months have been 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. Would 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 $21,400. What would be the effect on net operating income? What would be the effect if Pro racket sales increased by $21,400? Do not prepare income statements; use the incremental analysis approach in determining your answer.