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 asks to compute last year's CM ratio, the break even point in basketballs, and the degree of operating leverage at last year's sales level. Part two says due to an increase in labor rates, the company estimates that next year's variable expenses will increase by $3 per ball. If this change takes place and the selling price per ball remains at a constant $25, what will be next year's CM ratio and the break even point in balls? Question three says refer to the data in 2 and answer the following. 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, $90,000, as last year? The president feels that the company must raise the selling price of its basketballs. If they want 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?