{ "key_pair_value_system": true, "answer_rating_count": "", "question_feedback_html": { "html_star": "", "html_star_feedback": "" }, "answer_average_rating_value": "", "answer_date_js": "2024-05-28T00:12:55-04:00", "answer_date": "2024-05-28 00:12:55", "is_docs_available": "", "is_excel_available": "", "is_pdf_available": "", "count_file_available": 0, "main_page": "student_question_view", "question_id": "1809070", "url": "\/study-help\/questions\/northwood-company-manufactures-basketballs-and-sells-for-25-at-present-1809070", "question_creation_date_js": "2024-05-28T00:12:55-04:00", "question_creation_date": "May 28, 2024 12:12 AM", "meta_title": "[Solved] Northwood Company manufactures basketball | SolutionInn", "meta_description": "Answer of - Northwood Company manufactures basketballs and sells for $25. At present, the ball is manufactured in a small plant th | SolutionInn", "meta_keywords": "northwood,company,manufactures,basketballs,sells,$25,present,ball,manufactured,small,plant,relies", "question_title_h1": " Northwood Company manufactures basketballs and sells for $25. At present, the ball is manufactured in a small plant that relies heavily on direct labor", "question_title": " Northwood Company manufactures basketballs and sells for $25. At present, the", "question_title_for_js_snippet": "Northwood Company manufactures basketballs and 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 per ball, of which 60 is direct labor cost The plant has a capacity to produce 40,000 units Last year, the company sold 30,000 of these balls, with the following results Sales (30,000 balls) Variable expenses Contribution margin Fixed expenses operating income $750,000 450,000 300,000 210,000 $ 90,000 Required 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 that 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 (2) above 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, $90,000, as last year ", "question_description": "\"image\"image", "transcribed_text": "Northwood Company manufactures basketballs and 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 per ball, of which 60% is direct labor cost. The plant has a capacity to produce 40,000 units. Last year, the company sold 30,000 of these balls, with the following results: Sales (30,000 balls) Variable expenses Contribution margin Fixed expenses operating income $750,000 450,000 300,000 210,000 $ 90,000 Required: 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 that 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 (2) above. 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, $90,000, as last year?", "related_book": { "title": "Managerial Accounting", "isbn": "9789813155497, 73379581, 9813155493, 978-0073379586", "edition": "2010 Edition", "authors": "John J. Wild, Ken W. Shaw", "cover_image": "https:\/\/dsd5zvtm8ll6.cloudfront.net\/si.question.images\/book_images\/115.jpg", "uri": "\/textbooks\/managerial-accounting-2010-edition-115", "see_more_uri": "" }, "free_related_book": { "isbn": "1507879431", "uri": "\/textbooks\/windows-server-2012-a-handbook-for-professionals-1st-edition-978-1507879436-181102", "name": "Windows Server 2012 A Handbook For Professionals", "edition": "1st Edition" }, "question_posted": "2024-05-28 00:12:55", "see_more_questions_link": "\/study-help\/questions\/business-corporate-finance-2020-July-01", "step_by_step_answer": "The Answer is in the image, click to view ...", "students_also_viewed": [ { "url": "\/study-help\/questions\/help-e-blood-flow-through-the-kidneys-trace-blood-flow-390188", "description": "E. Blood Flow Through the Kidneys Trace blood flow through the kidneys. 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