Northwood Company manufactures basketbalis. The company has a ball that sets for 525 . At present, the ball is manufactured in a small plant that relies heavily on direct labot workers. Thus, variable expenses are high, totaling 515.00 per ball, of which 60% is direct tabor cost Last year, the company sold 32,500 of these balls, with the following results: Required: 1. Compute (a) last year's CM ratio and the beeak-even point in balis, and (b) the degree of operating leverage at 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 53 oo per bali, If this change takes place and the selling price per ball remains constant at $25.00, what will be next year's CM ratio and the break-even point in balts? 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, $101,000, as last year? 4. Refer again to the data in requirement 2. The president feels that the company must raise the seting price of its basketballs. If Northwood Company wants to maintain the same CM ratio as last year (as computed in requirement la', 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 expenses per ball by 40.007, but it would cause fived expenses per year to double. if the new plant is bulit, what would be the company's new CM ratio and new break-ewen point in balis? 6. Refer to the dasa in requirement 5. a. If the new plant is buil, how many balls will have to be sold next year to earn the same net operasing income, 5 totooo, as last year? b. Assume the new plant is built and that next year the company manufactures and sells 32,500 bals ghe same number as sold last year). Prepare a contribution format income statement and compute the degree of operating leverage. 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, $101,000, as last year? (Round your ardiver up to the nearelt whole unit.) 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 cause 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? (Round "CM ratio" to 2 decimal places and round "Unit sales to break even" up to the nearest whole unit.) Refer to the data in requirement 5. If the new plant is bult, how many balls will have to be sold next year to tarn the same net operating income, $101,000, as last year? (Round your ariswer up to the nearest whole unt.)