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a. b. c. d. please answer A, B, C, and D completely Northwood Company manufactures basketballs. The company has a ball that sells for $25.
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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 64,000 of these balls, with the following results: Sales (64,000 balls) Variable expenses Contribution margin Fixed expenses Net operating income $ 1,600,000 960,000 640,000 427,000 $ 213,000 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 sales level. (Round "Unit sales to break even" to the nearest whole unit and other answers to 2 decimal places.) CM Ratio % Unit sales to break even balls Degree of operating leverage 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.) CM Ratio % Unit sales to break even balls Refer to the data in Required (2). 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, $213,000, as last year? (Round your answer to the nearest whole unit.) Number of balls Refer 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? (Round "CM Ratio" to 2 decimal places and "Unit sales to break even" to the nearest whole unit.) Show less % CM Ratio Unit sales to break even ballsStep by Step Solution
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