1 Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $15.00 per ball of which 60% is direct labor cost Last year , the company sold 60.000 of these balls, with the following results: 16.66 Dots BOOK Sales (60,000 balls) Varble expenses Contribution margin Fixed expenses Net operating income $ 1,500,000 900,000 600,000 375.000 $ 225,000 Book Reg 1 Reg 2 Reg 3 Reg 4 Hint Reg 5 Reg 6A Reg 68 Print Compute(a) last year's CM ratio and the break-even point in balls, and (b) the degree of operating leverage at last year's sal level. (Round Unit sales to break even to the nearest whole unit and other answers to 2 decimal places.) References % CM Ratio Unit sales to break even Degree of operating leverage balls eBook RoQ1 Haa2 2 Reg 3 Reg 4 Reg 5 Reg 6A Reg 6B Hint Print Due to an increase in labor rates, the company estimates that next year's variable expenses will increase by $3.00 per ball. If this change takes place and the selling price per ball remains constant at $25.00, what will be next year's CM ratio and the break-even point in balls? (Round "CM Ratio" to 2 decimal places and Unit sales to break even to the nearest whole unit) References CM Ratio Unit sales to break even % balls RQ1 Reg 2 Hint Reg 3 Reg 4 Req5 Reg 6A Reg 6B Print Refer to the data in (2) above. If the expected change in variable expenses takes place, how many balls will have to be sold next year to dam the same net operating income, $225,000, as last year? (Round your answer to the nearest whole unit.) References Number of bats eBook R1 Reg 2 Reg 3 Rea Reg 5 Reg GA Reg 60 Hint Pin Refer again to the data in (2) above. The president feels that the company must raise the selling price of its basketballs. If Northwood Company wants to maintain the same CM ratio as last year (as computed in requirement 1a), what selling price per ball must it charge next year to cover the increased labor costs? (Round your answer to 2 decimal places.) References Selling price ( Req3 Reg 5 > eBook Raq 1 Reg 2 Reg 3 Reg 4 Reg 5 Rey 6A Reg 68 References Refer to the original data. The company is discussing the construction of a new, automated manufacturing plant. The new plant would stash variable expenses per ball by 40.00%, but it would cause fixed expenses per year to double. If the new plant is built, what would be the company's new CM ratio and new break-even point in balls? (Round "CM Ratio* to 2 decimal places and unit sales to break even to the nearest whole unit.) Show less CM Radio Unit sales to break even % bals Complete this question by entering your answers in the tabs below. R.1 Reg 2 Reg 3 Reg 4 Reg 5 Req6A Req 6B + If the new plant is built, how many balls will have to be sold next year to earn the same net operating income, $225,000, as last year? (Round your answer to the nearest whole unit.) inces Number of balls Complete this question by entering your answers in the tabs below. Reg 1 Req2 Req3 Req4 Regs Req 6A Req 68 Assume the new plant is built and that next year the company manufactures and sells 60,000 balls (the same number as sold last year). Prepare a contribution format income statement and compute the degree of operating leverage. (Round "Degree of operating leverage to 2 decimal places. Northwood Company Contribution Income Statement Degree of operating loverage