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HW LO 38 39 PROBLEM 3-20 Various CVP Questions: Break-Even Point; Cost Structure; Target Sales (L03-1, L03-3, LO3-4, LO3-5, L03-6, L03-8) 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: rating 2 ncrease per ball remains con- kes sul next year to earn the same net operating income, 4. Refer again to the data in requirement 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, what selling price per ball must it charge next year to cover the increased labor costs wateu manut wome net operating income con ICON - Lavoro Cousu ucung