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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. Last year, the company sold balls, with the following results: Sales balls $ Variable expenses Contribution margin Fixed expenses Net operating income $ Required: Compute: last year's CM ratio and the breakeven point in balls and the degree of operating leverage at last years sales level. Due to an increase in labor rates, the company estimates next year's variable expenses will increase by $ per ball. If this change takes place and the selling price per ball remains constant at $ what will be next year's CM ratio and the breakeven point in balls? Refer to the data in requirement 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, $ as last year? Refer again to the data in requirement 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 a what selling price per ball must it charge next year to cover the increased labor costs? 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 companys new CM ratio and new breakeven point in balls? Refer to the data in requirement If the new plant is built, how many balls will have to be sold next year to earn the same net operating income, $ as last year? Assume the new plant is built and that next year the company manufactures and sells balls the same number as sold last year Prepare a contribution format income statement and compute the degree of operating leverage.
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.
Last year, the company sold balls, with the following results:
Sales balls $
Variable expenses
Contribution margin
Fixed expenses
Net operating income $
Required:
Compute:
last year's CM ratio and the breakeven point in balls and
the degree of operating leverage at last years sales level.
Due to an increase in labor rates, the company estimates next year's variable expenses will increase by $ per ball. If this change takes place and the selling price per ball remains constant at $ what will be next year's CM ratio and the breakeven point in balls?
Refer to the data in requirement 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, $ as last year?
Refer again to the data in requirement 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 a what selling price per ball must it charge next year to cover the increased labor costs?
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 companys new CM ratio and new breakeven point in balls?
Refer to the data in requirement
If the new plant is built, how many balls will have to be sold next year to earn the same net operating income, $ as last year?
Assume the new plant is built and that next year the company manufactures and sells balls the same number as sold last year Prepare a contribution format income statement and compute the degree of operating leverage.
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