Northwood Company manufactures basketballs.

Northwood Company manufactures basketballs. The company has a ball that sells for $35. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $24.50 per ball, of which 70% is direct labor cost Last year, the company sold 55,000 of these balls, with the following results: 1,925,000 Sales (55,000 balls) Variable expenses Contribution margin 1,347,500 577,500 472,500 Fixed expenses Net operating income $ 105,000