etmeducation.com/ext/map/index.html con contexternal browserslaunchUnt=http%253A%252F%252Fnewconn er 6 - Homework Help Save & Ex Check my 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 40,000 of these balls, with the following results: Sales (40,000 balls) Variable expenses Contribution margin Fixed expenses Net operating income $ 1,000,000 600.000 400,000 265,000 $ 135,000 nces 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 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, $135,000, 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 (as computed in requirement ta), 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 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? e to search o R! nameducation.com/ext/map/index.html?con contexternal browser ter 6 - Homework Saved Help Save & Exit Sub Check my work 3. 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 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, $135,000, as last year? b. Assume the new plant is built and that next year the company manufactures and sells 40,000 balls (the same number as sold last year). Prepare a contribution format income statement and compute the degree of operating leverage Hook rences Complete this question by entering your answers in the tabs below. Reg1 Reg 2 Reg 3 Req4 Reg 5 Req6A Reg 6B If the new plant is built, how many balls will have to be sold next year to earn the same net operating income, $135,000, as last year? (Round your answer to the nearest whole unit) Number of ball Reqs Reg 0 > Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 Reg 4 Reg 5 Reg 6 Reg 6B nces Assume the new plant is built and that next year the company manufactures and sells 40,000 balls (the same number as sold last year). Prepare a contribution format income statement and compute the degree of operating leverage. (Round "Degree of operating leverage to 2 decimal places.) Northwood Company Contribution Income Statement Sales $ 1,000,000 Variable expenses Contribution margin 1,000,000 Fixed expenses Net operating income $ 1,000,000 Degree of operating leverage Check my w Feather Friends, Inc., distributes a high quality wooden birdhouse that sells for $80 per unit. Variable expenses are $4000 per unit, and fixed expenses total $180,000 per year. Its operating results for last year were as follows: Sales Variable expenses Contribution margin $ 2,160,000 1,000,000 Net operating income Required: Answer each questior independently based on the original data 1 What is the product's CM ratio? 2. Use the CM ratio to determine the break even point in dollar sales 3. If this year's sales increase by $54,000 and fixed expenses do not change, how much will net operating income increase? 4-a. What is the degree of operating leverage based on last year's sales? 4-6. Assume the president expects this year's sales to increase by 16% Using the degree of operating leverage from last year what percentage increase in net operating income will the company realize this year? 5. The sales manager is convinced that a 10% reduction in the selling price, combined with a $75,000 increase in advertising, would increase this year's unit sales by 25% a. If the sales manager is right, what would be this year's net operating income if his ideas are implemented? b. If the sales manager's ideas are implemented, how much will net operating income increase or decrease over last year? 6. The president does not want to change the selling price. Instead, he wants to increase the sales commission by $2.00 per unit. He thinks that this move, combined with some increase in advertising, would increase this year's sales by 25%. How much could the president increase this year's advertising expense and still earn the same $900,000 net operating income as last year? 1 D. IT the sales managers ideas are implemented, now much will net operating income increase or decrease over last year! 6. The president does not want to change the selling price. Instead, he wants to increase the sales commission by $2.00 per un thinks that this move, combined with some increase in advertising, would increase this year's sales by 25%. How much could the president increase this year's advertising expense and still earn the same $900,000 net operating income as last year? Complete this question by entering your answers in the tabs below. Book Reg 1 Reg 2 Reg 3 Reg 4A Reg 48 Reg SA Reg 58 Reg 6 "erences The sales manager is convinced that a 10% reduction in the selling price, combined with a $75,000 increase in advertising, would increase this year's unit sales by 25%. If the sales manager is right, what would be this year's net operating income if his ideas are implemented? (Do not round intermediate calculations.) Net operating income (los) D. I ne sales managers ideas are implemented, now much wil net operating income increase or decrease over last year 6. The president does not want to change the selling price. Instead, he wants to increase the sales commission by $200 per thinks that this move, combined with some increase in advertising, would increase this year's sales by 25% How much could president increase this year's advertising expense and still earn the same $900,000 net operating income as last year? Complete this question by entering your answers in the tabs below. Req 2 Req3 Reg 1 Req 4A Reg 4B Reg 5B Reg 5A Reg 6 The president does not want to change the selling price. Instead, he wants to increase the sales commission by $2.00 per unit. He thinks that this move, combined with some increase in advertising, would increase this year's sales by 25%. How much could the president increase this year's advertising expense and still earn the same $900,000 net operating income as last year? (Do not round intermediate calculations.) Show less The amount by which advertising can be increased is e to search o R! nameducation.com/ext/map/index.html?con contexternal browser ter 6 - Homework Saved Help Save & Exit Sub Check my work 3. 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 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, $135,000, as last year? b. Assume the new plant is built and that next year the company manufactures and sells 40,000 balls (the same number as sold last year). Prepare a contribution format income statement and compute the degree of operating leverage Hook rences Complete this question by entering your answers in the tabs below. Reg1 Reg 2 Reg 3 Req4 Reg 5 Req6A Reg 6B If the new plant is built, how many balls will have to be sold next year to earn the same net operating income, $135,000, as last year? (Round your answer to the nearest whole unit) Number of ball Reqs Reg 0 > Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 Reg 4 Reg 5 Reg 6 Reg 6B nces Assume the new plant is built and that next year the company manufactures and sells 40,000 balls (the same number as sold last year). Prepare a contribution format income statement and compute the degree of operating leverage. (Round "Degree of operating leverage to 2 decimal places.) Northwood Company Contribution Income Statement Sales $ 1,000,000 Variable expenses Contribution margin 1,000,000 Fixed expenses Net operating income $ 1,000,000 Degree of operating leverage Check my w Feather Friends, Inc., distributes a high quality wooden birdhouse that sells for $80 per unit. Variable expenses are $4000 per unit, and fixed expenses total $180,000 per year. Its operating results for last year were as follows: Sales Variable expenses Contribution margin $ 2,160,000 1,000,000 Net operating income Required: Answer each questior independently based on the original data 1 What is the product's CM ratio? 2. Use the CM ratio to determine the break even point in dollar sales 3. If this year's sales increase by $54,000 and fixed expenses do not change, how much will net operating income increase? 4-a. What is the degree of operating leverage based on last year's sales? 4-6. Assume the president expects this year's sales to increase by 16% Using the degree of operating leverage from last year what percentage increase in net operating income will the company realize this year? 5. The sales manager is convinced that a 10% reduction in the selling price, combined with a $75,000 increase in advertising, would increase this year's unit sales by 25% a. If the sales manager is right, what would be this year's net operating income if his ideas are implemented? b. If the sales manager's ideas are implemented, how much will net operating income increase or decrease over last year? 6. The president does not want to change the selling price. Instead, he wants to increase the sales commission by $2.00 per unit. He thinks that this move, combined with some increase in advertising, would increase this year's sales by 25%. How much could the president increase this year's advertising expense and still earn the same $900,000 net operating income as last year? 1 D. IT the sales managers ideas are implemented, now much will net operating income increase or decrease over last year! 6. The president does not want to change the selling price. Instead, he wants to increase the sales commission by $2.00 per un thinks that this move, combined with some increase in advertising, would increase this year's sales by 25%. How much could the president increase this year's advertising expense and still earn the same $900,000 net operating income as last year? Complete this question by entering your answers in the tabs below. Book Reg 1 Reg 2 Reg 3 Reg 4A Reg 48 Reg SA Reg 58 Reg 6 "erences The sales manager is convinced that a 10% reduction in the selling price, combined with a $75,000 increase in advertising, would increase this year's unit sales by 25%. If the sales manager is right, what would be this year's net operating income if his ideas are implemented? (Do not round intermediate calculations.) Net operating income (los) D. I ne sales managers ideas are implemented, now much wil net operating income increase or decrease over last year 6. The president does not want to change the selling price. Instead, he wants to increase the sales commission by $200 per thinks that this move, combined with some increase in advertising, would increase this year's sales by 25% How much could president increase this year's advertising expense and still earn the same $900,000 net operating income as last year? Complete this question by entering your answers in the tabs below. Req 2 Req3 Reg 1 Req 4A Reg 4B Reg 5B Reg 5A Reg 6 The president does not want to change the selling price. Instead, he wants to increase the sales commission by $2.00 per unit. He thinks that this move, combined with some increase in advertising, would increase this year's sales by 25%. How much could the president increase this year's advertising expense and still earn the same $900,000 net operating income as last year? (Do not round intermediate calculations.) Show less The amount by which advertising can be increased is