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1-6 please! Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ballis manufactured in a small plant that
1-6 please!
Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ballis 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 52,000 of these balls, with the following results: Sales (52,000 balls) 51,300,000 Variable expenses 000 Contribution margin 520, Fixed expenses 321,000 Het operating income $ 199,000 Required: 1 Compute (a) last year's CM radio and the break-even point in balls, and (b) the degree of operating leverage at last year's sales level. 2. 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? 3. 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 earn the same net operating income, $199,000, as last year? 4. Reler again to the data in (2) above the president feels that the company must raise the selling price of its basketballs. Ir Northwood Company wants to maintain the same CM ratio as last year (as computed in requirement la) what selling price per ball must it charge next year to cover the increased labor costs? S. Reler to the original data. The company is discussing the construction of a new, automated manufacturing plant. The new plant would slash 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? 6. Refer to the data in (5) above a. If the new plant is built how many balls will have to be sold next year to earn the same net operating income, $199,000, as last vear Step by Step Solution
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