Northwood Company manufactures basketbails. The company has a ball that sells for $25. At present, the ball is manufactured in a smali plant that relies heavly 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 33,750 of these balls, with the following results: Required: i. Compute (a) last year's CM ratio and the break-even point in balls, and (c) the degree of operaung leverage at lastyear's sales leveil. 2 Due to an increase in labor rates, the company estumates that next year's vartable expenses wil increase by $300 per bali. If this change takes place and the seling price per bail rematns constant at $25.00. what wil be next year's CM ratio and the breaiceven point in balls? 3. Refer to the data in requirement 2 if the expected change in vartabie expenses takes place, how many pals wil have to be sold noxa year to earn the sarne net operating income. $106.500, as last year? 4. Refer again to the data in requirement 2 The president foels that the company must raise the selling price of tis basketballs. Northwood Company wants to marnain the same CM ravo as last year (as computed in requilrement fal, what seling price per bail must it charge next year to cover the increased labor costs? 5. Refer to the orighal data. The company is discussing the construction of a new, automated manufacturing plant. The new plant would be the company's new CM rasto and new breakeven point in balis? 6. Refer to the data in requirement 5 a. If the new plant fs built, how many balis wil have to be sold next year to earn the same net operaung income. $106.500 asflast year? b. Assume the new plant is bult and that noxt year the company manufactures and selis, 33,750 balk ithe same number as sold last year. Prepare a contribution format income statement and compute the degree of operating leverage