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: Fixed production costs Advertising expense Administrative salaries Total Production $36.00 $ 3.00 Selling (5% of selling price) All sales are made through the company's own retail outlets. The Racket Division has the following fixed costs: April May Sales, in units, over the past two months have been as follows: Standard 2,000 8,000 Req 1A Deluxe 1,000 1,000 Req 1B Standard $ 60.00 Per Month $ 132,000 112,000 62,000 $ 306,000 Effect on Net operating income Req 3 Total Pro 5,000 8,000 3,000 12,000 Complete this question by entering your answers in the tabs below. 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. Would the break-even point 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 $21,200. What would be the effect on net operating income? What would be the effect if Pro racket sales increased by $21,200? Do not prepare income statements; use the incremental analysis approach in determining your answer. Req 4 Deluxe $ 90.00 Standard $ 45.00 $ 4.50 Req 5 < Req 4 Assume that sales of the Standard racket increase by $21,200. What would be the effect on net operating income? What would be the effect if Pro racket sales increased by $21,200? Do not prepare income statements; use the incremental analysis approach in determining your answer. Pro Pro $ 100.00 $36.00 $ 5.00 Req 5 >
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: Fixed production costs Advertising expense Administrative salaries Total Production $36.00 $ 3.00 Selling (5% of selling price) All sales are made through the company's own retail outlets. The Racket Division has the following fixed costs: April May Sales, in units, over the past two months have been as follows: Standard 2,000 8,000 Req 1A Deluxe 1,000 1,000 Req 1B Standard $ 60.00 Per Month $ 132,000 112,000 62,000 $ 306,000 Effect on Net operating income Req 3 Total Pro 5,000 8,000 3,000 12,000 Complete this question by entering your answers in the tabs below. 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. Would the break-even point 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 $21,200. What would be the effect on net operating income? What would be the effect if Pro racket sales increased by $21,200? Do not prepare income statements; use the incremental analysis approach in determining your answer. Req 4 Deluxe $ 90.00 Standard $ 45.00 $ 4.50 Req 5 < Req 4 Assume that sales of the Standard racket increase by $21,200. What would be the effect on net operating income? What would be the effect if Pro racket sales increased by $21,200? Do not prepare income statements; use the incremental analysis approach in determining your answer. Pro Pro $ 100.00 $36.00 $ 5.00 Req 5 >
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:
Selling price per racket
Variable expenses per racket:
Fixed production costs
Advertising expense
Administrative salaries
Total
Production
Selling (5% of selling price)
$36.00
$ 5.00
All sales are made through the company's own retail outlets. The Racket Division has the following fixed costs:
April
May
Sales, in units, over the past two months have been as follows:
Standard
2,000
8,000
Req 1A
Deluxe
1,000
1,000
Req 1B
Standard
$ 60.00
Per Month
$ 132,000
112,000
62,000
$ 306,000
Effect on Net operating income
Req 3
$36.00
$ 3.00
Total
Pro
5,000
8,000
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. Would the break-even point 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 $21,200. What would be the effect on net operating income? What would be
the effect if Pro racket sales increased by $21,200? 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 4
Deluxe
$ 90.00
Standard
Req 5
< Req 4
$ 45.00
$ 4.50
Assume that sales of the Standard racket increase by $21,200. What would be the effect on net operating income? What
would be the effect if Pro racket sales increased by $21,200? Do not prepare income statements; use the incremental analysis
approach in determining your answer.
Pro
Pro
$ 100.00
Req 5 >
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Step 1: Introduction of break even point & Income Statement
VIEWStep 2: Contribution format income statements for April
VIEWStep 3: Contribution format income statements for May
VIEWStep 4: Calculation of Breakeven point in $ of April
VIEWStep 5: Calculation of Breakeven point in $ of May
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