Lan ytar the compary sold $30,000$ of these bolls, with the following resaits.

$\backslash$table$[[\backslash$table$[[$Sales$]],5750,000],[$Variable reprnaes,$450000],[$Contribution atargin,$300,000],[$Faxed expenses,$210000],[$Operatine income,$390\mathrm{.}000]]$

Regaind:

I Compote $($a$)$ the CM ratio and the breakeven point in balls, and $($b$)$ the deget of operatiag leverage at lait yrar s iales level.

$2.$ Due to an increase in labour rates, the compary entimates that variable expenses will increase $65$ J per ball sent year if this elange takes place and the selline price per ball remains constant at $$25,$ what will be the new CM ratio and boeak even point in balls?

$3.$ Refer to the data in $(2)$ above If be expected chanet in variable expenses takes place. how mamy balls will have to be acid next year to earn the asate operatine income, $$90,000,$ as last year?

$4$ Refer again to the data in $(2)$ above The president feels that the company must raise the selline price of as basketbalks If Northwood Compary wants to maintain the same CM ratio as last gear, what selline price per balt must it charge nest year to cover the increased labour cosits$?$

$5.$ Refer so the orieinal data. The company is discusite the construction of a new aubomated manulacturing plam. The new is buit, what would be the company's new CM ratio and new breakeves poin in bals?

$6$ Refer to the data in $(5)$ above.

a$.$ If the sew plant is built, how mary balls will have to be sold nest year to earn the same net operating inconic $590$ ono as last yrar?

b$.$ Asume the new plant is built and that nest year the compary manufactures and sells $30$ o$00$ balis $($the wane manber as sold last year$).$ Prepare a contribution format incone stateanent and compute be degree of eperatine ineiset

e If you were a member of top managenent, would you have been in favour of conatructing the orw plant" Explaten

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$-$labour workers. Thus, variable expenses are high, totalling S$15$ per ball, of which $60\%$ is direct labour cost.

Last year the company sold $30,000$ of these balls, with the following results:

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$\backslash$table$[[$Sales$,$$$750,000$