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Northwood Company manufactures a basketball selling for $ 2 5 per unit in a small plant heavily relying on direct labor workers. Thus, variable expenses
Northwood Company manufactures a basketball selling for $ per unit in a small plant heavily relying on direct labor workers. Thus, variable expenses are high, totaling $ per ball, of which is direct labor cost.
orthwood Company manufactures a basketball selling for $ per unit in a small plant heavily relying on direct labor workers. Thus, variable expenses are high, totaling $ per ball, of which is direct labor cost
Last year, the company sold balls, with the following results:
Sales balls $
Variable expenses
Contribution margin
Fixed expenses
Net operating income $
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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 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 breakeven point in balls?
Note: Round CM Ratio" to decimal places and round "Unit sales to break even" up to the nearest whole unit.
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