Already through with 1 through 4 help with 5 and 6 please

5-20 Various CVP Questions 054. LOS-5, LO5-6,LOs stions Break-Even Point: Cost Structure: Target Sales (LOs-1, LO5-3, LOS-5, LOS-6, LO5-8 Northwood Co present, the ballis manufactures basketballs. The company has a ball that sells fo($25.A are high. total ine15perballOf which 60% is direct labor cost. Company ball is manufactured i hat relies heavily on direct labor workers espensmpany sold 30,000 of these balls, with the following results: ale Sales (30,000 balls) Variable expenses Contribution margin. $750,000 . 450.000 300,000 ....210.000 Fixed expenses 160,6 Net operating income Compute (a) the CM ratio and the break-even point in balls, and (b) the degree of operating leverage at last year's sales level. Due to an increase in labor rates, the company estimates that variable expenses will increase by $3 per ball next year. If this change takes place and the selling price per ball remains con- stant at $25, what will be the new CM ratio and break-even point in balls? Refer to the data in (2) above. If the expected change in variable expenses takes place, how 3. balls will have to be sold next year to earn the same net operating income, $90000, as last year? 4 Refer again to the data in (2) above. The president feels that the company must raise the sell- ing price of its basketballs. If Northwood Company wants to maintain the same CM ratio as last year, what selling price per ball must it charge next year to cover the increased labor costs? 5. Refer to the original data. The company is discussing the construction of a new, automated manufacturing plant. The new plant would slash vanable expenses per ball by 40%, but it nses per year to double. If the new plant is built, what would be the would cause f company's ne CM ratio and new break-even point in balls? 6 Refer to the data hn (5) above. a If the new plant is buil ny balls will have to be sold next year to earn the same net operating i 90,000 3s last year? Assume the new plant i built and that next year the company manufactures and sells 30,000 balls (the same number as sold last year). Prepare a contribution format income statement and compute the degree of operating leverage. the new plant? Explain. e If you were a member of top management, would you have been in favor of constructing