HW LO 38 39 PROBLEM 3-20 Various CVP Questions: Break-Even Point; Cost Structure; Target Sales (L03-1, LO3-3, LO3-4, L03-5, LO3-6, LO3-8] 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 per ball, of which 60% is direct labor cost. Last year, the company sold 30,000 of these balls, with the following results: Sales (30,000 balls Variable expenses Contribution margin Fixed expenses. Net operating income $750,000 450,000 300,000 210.000 $ 90,000 Required: 1. Compute(a) the CM ratio and the break-even point in balls, and (b) the degree of operating leverage at last year's sales level