Nonthwood Company manufactures basketballs. The company has a ball that selis for $25. At present, the ball is manufactured in a small plant that relles heavily on direct labor workers. Thus, variable expenses are high, totoling $15.00 per ball, of which 60% is direct laboe cost: Last year, the company soid 30,750 of these bolls, with the following results: Required: 1. Compute (a) last years CM ratio and the break-even point in balls, and (b) the degree of operating leverage at last year's sales level 2 Due to on increase in labor rates, the company eatimates that next year's variable expenses will increase by $3.00 per ball. If this change takes place and the selling price per ball remains constant at $2500, what will be next year's CM ratio and the break-even point in balls? 3. Fefer to the data in requirement 2 if the expected change in variable expenses takes place, how many balls will have to be soid next year to earn the sane net operating income, $93,300, as tast year? 4. Refer again to the data in requirement 2 . The president feels that the company must raise the selling price of its basketbals. If Northwood Company wants to maintain the same CM ratio as last year (as computed in requirement la), what seling price per ball must it charge next year to cover the increased labor costs? Complete this question by entering your answers in the tabs below. Refer to the data in requirement 5 . If the new plant is built, how many balls will have to be sold next vear to eam the same net operating income, $93,300, as last year? (Round your answer up to the nearest whole unit.) 5. Refer to the original data. The company is discussing the construction of a new, automated manufacturing plant. The new plant would slash yariable expenses per ball by 40.00%, but it would cause fixed expenses per year to double. if the new plant is built, what would be the company's new CM ratio and new break-even point in balls? 6. Refer to the data in requirement 5 ; a. If the new plant is bullt, how many balis will have to be sold next year to earn the same net operating income, $93,300, as last year? b. Assume the new plant is buit and that next year the company manufactures and selis 30,750 balls (the same number as sold last year). Prepare a contribution format income statement and compute the degree of operating leverage. Complete this question by entering your answers in the tabs below. Compute (a) last year's CM ratio and the break-even point in balls, and (b) the degree of operating leverage at last year's sales level. (Round "Unit sales to break even" up to the nearest whole unit and other answers to 2 decimal places.) Complete this question by entering your answers in the tabs below. Refer to the data in requirement 2. 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, $93,300, as last year? (Round your answer up to the nearest whole (unit.) Complete this question by entering your answers in the tabs below. Refer again to the data in requirement 2 . 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 pri per ball must it charge next year to cover the increased labor costs? (Round your answer to 2 decimal places.) Complete this question by entering your answers in the tabs below. Refer to the original data. The company is discussing the construction of a new, automated manufacturing plant. The new plant would slash variable expenses per ball by 40,00%, but it would cause fixed expenses per year to double. If the new plant is built, what would be the company's new CM ratio and new break-even point in balls? (Round "CM ratio" to 2 decimat places and round "Unit sales to break even' up to the nearest whole unit.) Refer to the data in requirement 5. Assume the new plant is built and that next year the company manufactures and selis 30,750 balls (the same number as sold last year). Prepare a contribution format income statement and compute the degree of operating leverage. (Round "Degree of operating leverage", to 2 decimal places.) Due to an increase in labor rates, the company estimates that next year's variable expenses will increase by $3.00 per ball, If this change takes place and the selling price per ball remains constant at $25.00, what wil be next vear's CM rabio and the unit
