Northwood Company manufactures basketbalis. The company has a ball that sells for $25. At present, the ball is manufactured in a small plant that relies heavily 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 64,000 of these balls, with the following results: Required: 1. Compute (a) last year's CM ratio and the break-even point in balis, and (b) the degree of operating leverage ot last year's sales level. 2. Due to an increase in labor rates, the company estimates that next year's variable expenses will increase by $3.00 per bali, If this change takes place and the selling price per bali remains constent at $25.00, what will be next year's CM ratio and the break-even point in balls? 3. Refer to the data in (2) above. If the expected change in variable expenses takes place, how many bails will have to be sold next year to earn the same net operating income, $213,000, as last year? 4. Refer agoin to the dato in (2) above. 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 yeor (as computed in requirement fa), what seling 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 expenses per ball by 40.00%, but it would couse 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 (5) above. a. If the new plant is built, how many balis will have to be sold next year to eam the same net operoting income, $213,000, as last year? b. Assume the new plant is built and that next year the company manufactures and sells 64,000 balls (the same number as sold last year). Prepore a contribution format income statement and compute the degree of operating leverage