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) $28.00 $ 2.50 All sales are made through the company's own retail outlets. The Racket Division has the following fixed costs: Per Month $ 128,000 April May Standard $50.00 108,000 58,000 $ 294,000 Sales, in units, over the past two months have been as follows: Standard Deluxe Pro 2,000 1,000 5,000 8,000 Deluxe $75.00 Total 8,000 1,000 3,000 12,000 $ 33.00 $ 3.75 Pro $ 100.00 $35.00 $5.00 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 $20,800. What would be the effect on net operating income? What would be the effect if Pro racket sales increased by $20,800? Do not prepare income statements; use the incremental analysis approach in determining your answer.
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) $28.00 $ 2.50 All sales are made through the company's own retail outlets. The Racket Division has the following fixed costs: Per Month $ 128,000 April May Standard $50.00 108,000 58,000 $ 294,000 Sales, in units, over the past two months have been as follows: Standard Deluxe Pro 2,000 1,000 5,000 8,000 Deluxe $75.00 Total 8,000 1,000 3,000 12,000 $ 33.00 $ 3.75 Pro $ 100.00 $35.00 $5.00 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 $20,800. What would be the effect on net operating income? What would be the effect if Pro racket sales increased by $20,800? Do not prepare income statements; use the incremental analysis approach in determining your answer.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Please do not give image format
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
Standard
$50.00
Production
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
$ 128,000
108,000
58,000
$ 294,000
April
May
$28.00
$2.50
Sales, in units, over the past two months have been as follows:
Standard Deluxe Pro
1,000 5,000
Total
2,000
8,000
8,000
1,000 3,000 12,000
Deluxe
$75.00
Required:
1-a. Prepare contribution format income statements for April.
1-b. Prepare contribution format income statements for May.
$ 33.00
$ 3.75
Pro
$ 100.00
$35.00
$5.00
Complete this question by entering your answers in the tabs below.
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 $20,800. What would be the effect on net operating income? What would be
the effect if Pro racket sales increased by $20,800? Do not prepare income statements; use the incremental analysis approach in
determining your answer.
Transcribed Image Text:Complete this question by entering your answers in the tabs below.
Req 1A
Sales
Variable expenses:
Req 1B
Production
Selling
Prepare contribution format income statements for April. (Round "Total percent" answers to 1 decimal place)
Topper Sports, Incorporated
Income Statement for April
Deluxe
Total variable expenses
Contribution margin
Fixed expenses:
Production
Advertising
Administrative
Req 3
Total fixed expenses
Net operating income
Amount
$
Req 4
Standard
0
0
%
0
0
Req 5
Amount
$
0
0
%
0
0 $
Amount
Pro
0
0
%
0
0
$
$
Total
Amount
0
0
0
%
0.0
0.0
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