Assignment 4-4 Week 4 Problems Help Save&Exit Submit Check my work Northwood Company manufactures basketballs. The company has a ball that sells for $34, At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $24.00 per ball, of which 71% is direct labor cost Last year, the company sold 30,000 of these balls, with the following results: 15 points Sales (38,886 balls) ariable expenses Contribution nargin Fixed expenses S 1,028,8e8 308,898 $ 98,986 operating incone References Required 1, Compute (a) last year's CM ratio and the break-even point in balls, and (b) the degree of operating leverage at last years 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 $34,00, what will be next years CM ratio and the break-even point in balls? 3. Refer to the data in (21 above, if the expected change in variable expenses akes place, hor many balls will haveto eld net year to earn the same net operating income, $90,000, as last year? 4. 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 las computed in requirement la), what selling price per bal 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 variable expenses per ball by 2941%, 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, $90000, as last year b. Assume the new plant is 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 Complete this question by entering your answers in the tabs below. prev 10, 2iii Next>