15. Alpha Corporation reported the following data for its most recent year: sales, $500,000; variable expenses, $300,000, and fixed expenses, $150,000. The company's degree of operating leverage is: A. 10 B. 2 C. 4 D. 2.5 $00,00o-300 50,00)sou S00,000 300000 200 000 sales VE 16. 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 per ball, of which 60% is direct labor cost. Last year, the company sold 30,000 of these balls, with the following results: $ 750,000 Sales (30,000 balls) Variable expenses 210.000 S 90.000 2 1 0,000 = 10 "br unt , uni Fixed expenses Net operating income 1-a. Compute last year's CM ratio and the break-even point in balls. 1-b. Compute the the degree of operating leyerage at last year's sales level. to an increase in labor rates, the compary Estimates that next year's variable expenses will 2.Du a per ball. If this change takes place and the selling price per ball remains constant at s25, what will be next year's CM ratio and the break-even point in balls? 3. Refer to the data in (2) above. If the expected change in variable expenses takes place, how balls will have to be sold next year to earn the same net operating income, $90,000, as last 4. Refer again to the data in (2) above. The president feels that the company must raise he of its basketballs. If Northwood Company wants to maintain selling r (as computed in requirement la), what selling price per ball must it charge next year to cover the increased labor costs? the same CM ratio as