Northwood Company manufactures basketballs. The company has a bal that sells for 526 . At present, the bail is manufactured in a small plant that felies heavily on direct labor workers. Thus, vatiable expenses are high, totaling $15.00 per balt of which 60% is drect labor cost Last year, the company soid 34,250 of these bolls, with the following results: Required: 1. Compute (a) last year's CM atio and the break-even point in balls, and (b) the degree of operating leverage ot lost year's sales lovel. 2. Due to an increase in labor rates, the compary estimates that next year's variable expenses will increase by $3. D0 per ball. If this change takes place and the selling price per balt remains constant at $25.00, what will be thext year's CM ratio and the break-even point in balis? 3. Refer to the data in requirement 2 . If the expected change in wariable expenses takes place. how many belis will have to be sold next year to earn the same net operating income, 5108,700 , as last year? 4. Refer again to the data in requirement 2. The president feels that the compary must raise the selling price of its basketballs. If Northwood Company wants to maintain the same CM ratio as last year (as computed in requirement ta), what selling price per ball must it charge next year to cower 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 cause fixed expenses per year to double. If the new plant is buit, what would be the company's new CM ratio and new break-even point in bolls? 6. Reler to the data in iequirement 5 . a If the new plant is built how many balls will have to be sold next year to earn the same net operatng income, 5108,700 as last year? 6. Assume the new plant is buir and that next yeer the company manufactures and wills 34.250 bolls the same number as sold last year. Prepare a contibution format income statement and compute the degree of operating leverage