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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
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: Standard Deluxe Pro Selling price per racket $ 60.00 $90.00 $ 100.00 Variable expenses per racket: Production $36.00 $ 45.00 $ 36.00 Selling (5% of selling price) $ 3.00 $ 4.50 $ 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 $ 136,000 116,000 66,000 $ 318,000 Sales, in units, over the past two months have been as follows: April May Standard Deluxe 2,000 1,000 8,000 1,000 Pro 5,800 3,000 Total 8,888 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 $21,600. What would be the effect on net operating income? What would be the effect if Pro racket sales increased by $21,600? Do not prepare income statements; use the incremental analysis approach in determining your answer. Topper Sports, Incorporated Income Statement for April Standard Deluxe Amount % Amount $ 120,000 100$ 90,000 100 $ Pro Total % % Amount 500.000 Amount $ 710,000 100 100 Sales Variable expenses: Production Seling 35 % 30 X 72,000 6,000 OS 40 45,000 5 4,500 180.000 25,000 297,000 35,500 32.8 X 5.0 5 5 45 49,500 40 35 332,500 37.8 78,000 $ 42,000 205,000 295,000 55 $ 40,500 60 S 65 $ 377.500 62.2 Total variable expenses Contribution margin Fixed expenses: Production Advertising Administrative 136,000 116,000 66,000 Total fixed expenses Net operating income 318.000 59,500 Standard Topper Sports, Incorporated Income Statement for May Deluxe % Amount % 100 $ 90,000 100 Pro Amount Amount 480,000 Sales Total % Amount 100$ 870.000 % $ 300,000 100 Variable expenses Production Selling 288,000 24,000 408 5 45,000 4,500 SIS 30% 441,000 35 5 108,000 15,000 35.0 X 5.0 5 43,500 Total variable expenses 312,000 168,000 45 55 49,500 $ 40.500 35 $ 40 60 123,000 $ 177.000 484,500 385,500 40.0 60.0 65 $ Fixed expenses Production Advertising Administrative OOO 136,000 116.000 66,000 Total fred expenses Net operating income 318,000 67,500 $ RAGA Assume that sales of the Standard racket increase by $21,600. What would be the effect on net operating income? What would be the effect if Pro racket sales increased by $21,6007 Do not prepare income statements; use the incremental analysis approach in determining your answer. Standard Pro Effect on Net operating income
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