Northwood Company manufactures a basketball selling for $25 per unit in a small plant heavily relying on direct labor workers. Thus, variable expenses are high, totaling $15.00 per ball, of which 60% is direct labor cost. Last year, the company sold 32,250 balls, with the following results: Sales (32,250 balls) Variable expenses Contribution margin Fixed expenses Net operating income Required: $ 806,250 483,750 322,500 222,600 $ 99,900 1. 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 2. Due to an increase in labor rates, the company estimates next year's variable expenses will increase by $3 per ball. If this change takes place and the selling price per ball remains constant at $25, what will be next year's CM ratio and the break-even point in balls? 3. 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, $99,900, as last year? 4. 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 fa), what selling price per ball must it charge next year to cover the increased labor costs? 5. Refer to the original data. The company is discussing the construction of a new, automated manufacturing plant. The new plant) would slash variable eynenses ner hall hu 4000% but it would cance fivert evnences ner vear to double. If the new plant is hilt