50.1K

Verified Solution

Link Copied!

Due to erratic sales of its sole producta high-capacity battery for laptop computersPEM, Inc., has been experiencing financial difficulty for some time. The companys contribution format income statement for the most recent month is given below:

Sales (12,700 units $20 per unit)	$	254,000
Variable expenses		152,400
Contribution margin		101,600
Fixed expenses		113,600
Net operating loss	$	(12,000	)

show all the work

Topper Sports, Inc., produces high-quality sports equipment. The company's Racket Division manufactures three tennis racketsthe Standard, the Deluxe, and the Prothat are widely used in amateur play. Selected information on the rackets is given below: Standard $ 70.00 Deluxe $106.00 Pro $160.00 Selling price per racket Variable expenses per racket: Production Selling (5% of selling price) $ 42.00 $ 3.50 $ 53.00 $ 5.30 $ 64.00 $ 8.00 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 $ 160,000 140,000 90,000 $ 390,000 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 Total 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. 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 $24,000. What would be the effect on net operating income? What would be the effect if Pro racket sales increased by $24,000? 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. Reg 1A Reg 1B Reg 3 Reg 4 Reg 5

Answer & Explanation Solved by verified expert

See Answer