Northwood Company manufactures basketballs. The company has a ball that sells for $37. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $25.90 per ball, of which 70% is direct labor cost. Last year, the company sold 43,000 of these balls, with the following results: Sales (43,000 balls) Variable expenses $1,591,000 1,113,700 Contribution margin Fixed expenses 477,300 277,500 Net operating income $ 199,800 Required: 1-a. Compute last years CM ratio and the break-even point in balls. (Do not round intermediate calculations. Round up your final break even answers to the nearest whole number.) CM Ratio 30% Unit sales to break even 25,000 balls 1-b. Compute the the degree of operating leverage at last year's sales level. (Round your answer to 2 decimal places.) ree of operating 2.39 2. Due to an increase in labor rates, the company estimates that next year's variable expenses will increase by $1.85 per ball. If this change takes place and the selling price per ball remains constant at $37.00, what will be next years CM ratio and the break-even point in balls? (Do not round intermediate calculations. Round up your final break even answers to the nearest whole number.)