Company manufactures basketballs. The company has a bal that sells for $36. At present, the Dan is manufactured in a small plant that relies heavily on direct labor workers. Thus high, totaling $25.20 per ball, of which 70% is direct labor cost variable expenses are Last year, the company sold 52,000 of these balls, with the following results: Sales (52,000 balls) Variable expenses $1,872,000 1,310,400 Contribution margin Fixed expenses 561,600 453,600 Net operating income $ 108,000 1-a. Compute last year's CM ratio and the break-even point in balls. (Do not round intermediate CM Ratic Unit sales to break even balls 1-b. Compute the the degree of operating leverage at last year's sales level. (Round your answer to 2 decimal places.) operating 2. Due to an increase in labor rates, the company estimates that next year's variable expenses will increase by $1.80 per ball. If this change takes place and the selling price per ball remains constant at $36.00, what will be next years CM ratio and the break-even point in balls? (Do not round intermediate calculations.) CM Ratio Unit sales to break even balls 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 eam the same net operating income, $108,000, as last year? (Do not round intermediate calculations. Round your answer to the nearest whole unit) 3. Number of balls 4. Refer again to the data in (2) above. The president feels hat he company must raise the of its basketbals.I Nortwood Company wants to maintain the same CM rao computed in requirement 1a), what seling prnice per ba must it charge next year to cover the increased labor costs? (Do not round intermediate caleulations. Round your answer to 2 decimal Seling price 5. Refer to the original data. The company is discussing the construction of a new, automarted manufach ring plat,The newplant would slash variable expenses per baa by 20%, but would cane ted expenses per year to increase by 70% if the new plant is ba, what would be the company's new CM ratio and new break-even point in balis? (Do not round intermediate calculations 6. Refer to he data in (5) above. a If he new plant is built, how many balils will have to be sold nest year to eam the same net operating income, $108,000, as last year?(Do not round intermediate caculations. Round up your final answer to the nearest whole number b-1.Assume the new plant is buit and that nendt year the company manufactures and sells 52,000 bals the same rumber as sold last year). Prepare a cont buton format income statement (Do not b-2 Compute the degree of operating leverage (Do not round intermediate calculations and round your final answer to 2 decimal places operating
