Hi, I was hoping I could get some help on a managerial accounting homework assignment. The question says that Northwood Company is a company that manufactures basketballs. The company sells each basketball for $25. Currently, the basketball is manufactured in a small plant that relies heavily on direct labor workers. This leads to variable expenses being high, totaling $15 per basketball, 60% of which is direct labor costs. Last year, the company sold 30,000 of these basketballs with the following results: sales of 30,000 basket balls is equal to $750,000, variable expenses is equal to $450,000, contribution margin is equal to $300,000, fixed expenses is equal to $210,000, and the net operating income is equal to $90,000.

For part one, it says the company is discussing the construction of a new, automated manufacturing plant. The new plant would slash variable expenses per ball by 40%, 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? Then, if the new plant is built, how many balls will have to be sold next year to earn the same net operating income, $90,000, as last year? Also, assuming the new plant is built and that next year the company manufactures and sells 30,000 balls, pleas prepare contribution format income statement and compute the degree of operating leverage.