lwood Company manufactures basketballs. The company has a ball that sells for $42. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling$2520 per ball, of which 60% is direct labor cost Last year, the company sold 44,000 of these balls, with the following results Required 1-a. Compute last years CM ratio and the break-even point in balls. (Do not round intermediate calculations.) 1-b, Compute the the degree of operating leverage at last year's sales level. (Round your answer to 2 decimal places) 2. Due to an increase in labor rates, the company estimates that next years variable expenses will increase by $3.36 per ball. If this change takes place and the selling price per ball remains constant at $42.00, what will be next years CM ratio and the break-even point in balls? (Do not round intermediate calculations) 3. Refer to the data in (2) above. 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, $268,800, as last year? (Do not round intermediate calculations. Round your answer to the nearest whole unit.) 4. Refer again to the data in (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 (as computed in requirement 1a), what selling price per ball mustit charge next year to cover the increased labor costs? (Do not round intermediate calculations. Round your answer to 2 decimal places.) lwood Company manufactures basketballs. The company has a ball that sells for $42. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling$2520 per ball, of which 60% is direct labor cost Last year, the company sold 44,000 of these balls, with the following results Required 1-a. Compute last years CM ratio and the break-even point in balls. (Do not round intermediate calculations.) 1-b, Compute the the degree of operating leverage at last year's sales level. (Round your answer to 2 decimal places) 2. Due to an increase in labor rates, the company estimates that next years variable expenses will increase by $3.36 per ball. If this change takes place and the selling price per ball remains constant at $42.00, what will be next years CM ratio and the break-even point in balls? (Do not round intermediate calculations) 3. Refer to the data in (2) above. 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, $268,800, as last year? (Do not round intermediate calculations. Round your answer to the nearest whole unit.) 4. Refer again to the data in (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 (as computed in requirement 1a), what selling price per ball mustit charge next year to cover the increased labor costs? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
