Topper Sports, Incorporated, produces -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) All sales are made through the company's own retail outlets. The Racket Division has the following fixed costs: April May Per Month $ 124,000 104,000 54,000 $ 282,000 Standard Deluxe 2,000 1,000 8,000 1,000 Standard $.40.00 Sales, in units, over the past two months have been as follows: Pro 5,000 3,000 $ 22.00 $ 2.00 Total Deluxe $ 60.00 8,000 12,000 $ 27.00 $ 3.00 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. Pro $90.00 Saved Complete this question by entering your answers in the tabs below. $ 31.50 $ 4.50 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 $20,400. What would be the effect on net operating income? What would be he effect if Pro racket sales increased by $20,400? Do not prepare income statements; use the incremental analysis approach in determining your answer.
Topper Sports, Incorporated, produces -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) All sales are made through the company's own retail outlets. The Racket Division has the following fixed costs: April May Per Month $ 124,000 104,000 54,000 $ 282,000 Standard Deluxe 2,000 1,000 8,000 1,000 Standard $.40.00 Sales, in units, over the past two months have been as follows: Pro 5,000 3,000 $ 22.00 $ 2.00 Total Deluxe $ 60.00 8,000 12,000 $ 27.00 $ 3.00 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. Pro $90.00 Saved Complete this question by entering your answers in the tabs below. $ 31.50 $ 4.50 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 $20,400. What would be the effect on net operating income? What would be he effect if Pro racket sales increased by $20,400? 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
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Question
Transcribed Image Text:Topper Sports, Incorporated, produces
rackets-the Standard, the Deluxe, and the Pro-that are widely used in amateur play. Selected information on the rackets is given
-quality sports equipment. The company's Racket Division manufactures three tennis
below:
Selling price per racket
Variable expenses per racket:
Fixed production costs
Advertising expense
Administrative salaries
Total
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:
April
May
Per Month
$ 124,000
Sales, in units, over the past two months have been as follows:
Standard Deluxe
2,000
1,000
8,000
1,000
Req 1A
104,000
54,000
$ 282,000
Req 1B
Req 3
Standard
$ 40.00
Pro
5,000
3,000
$ 22.00
$ 2.00
Req 4
Total
8,000
12,000
Complete this question by entering your answers in the tabs below.
Deluxe
$ 60.00
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 $20,400. What would be the effect on net operating income? What would be
the effect if Pro racket sales increased by $20,400? Do not prepare income statements; use the incremental analysis approach in
determining your answer.
$ 27.00
$ 3.00
Req 5
Pro
$90.00
Saved
$31.50
$4.50
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