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 $ 70.00 Pro $ 100.00 Selling price per racket $ 55.00 Variable expenses per racket: Production $ 35.00 $ 33.00 $ 2.75 $36.00 $ 5.00 Selling (5% of selling price) $ 3.50 All sales are made through the company's own retail outlets. The Racket Division has the following fixed costs: Per Month Fixed production costs $ 142,000 Advertising expense 122,000 72,000 Administrative salaries Total $ 336,000 Sales, in units, over the past two months have been as follows: Standard Deluxe Pro Total 2,000 1,000 5,000 8,000 April May 8,000 1,000 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.
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 $ 70.00 Pro $ 100.00 Selling price per racket $ 55.00 Variable expenses per racket: Production $ 35.00 $ 33.00 $ 2.75 $36.00 $ 5.00 Selling (5% of selling price) $ 3.50 All sales are made through the company's own retail outlets. The Racket Division has the following fixed costs: Per Month Fixed production costs $ 142,000 Advertising expense 122,000 72,000 Administrative salaries Total $ 336,000 Sales, in units, over the past two months have been as follows: Standard Deluxe Pro Total 2,000 1,000 5,000 8,000 April May 8,000 1,000 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text: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:
Deluxe
Pro
Standard
$ 55.00
Selling price per racket
$ 70.00
$ 100.00
Variable expenses per racket:
Production
$ 33.00
$ 2.75
$ 35.00
$ 3.50
$36.00
$ 5.00
Selling (5% of selling price)
All sales are made through the company's own retail outlets. The Racket Division has the following fixed costs:
Per Month
Fixed production costs
$ 142,000
Advertising expense
122,000
72,000
Administrative salaries
Total
$ 336,000
Sales, in units, over the past two months have been as follows:
Standard
Deluxe
Pro
Total
2,000
1,000
5,000
8,000
April
May
8,000
1,000
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 $22,200. What would be the effect on net operating income? What would be
the effect if Pro racket sales increased by $22,200? Do not prepare income statements; use the incremental analysis approach in
determining your answer.
Complete this question by entering your answers in the tabs below.
Req 1A
Req 1B
Req 3
Req 4
Req 5
Prepare contribution format income statements for April. (Round "Total percent" answers to 1 decimal place)
Topper Sports, Incorporated
Income Statement for April
Standard
Deluxe
Pro
%
Amount
%
%
Amount
Sales
Variable expenses:
Total variable expenses
Fixed expenses:
Total fixed expenses
$
Amount
0
0
0
0 $
0
0
0
0 $
Amount
0
0
0
0 $
$
Total
0
0
0
0
%
0.0
0.0
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