Northwood Company manufactures basketballs. The company has a ball that 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 $15.00 per ball of which 60% is direct labor cost. Last year, the company sold 42,000 of these balls, with the following results 11 Sales (42,000 balls) Variable expenses Contribution margin Fixed expenses Net operating income $ 1,050,000 630,000 420,000 266,800 $ 154,000 at last year's sales level complete this question by entering your answers in the tabs below. Req 1 Reg 2 Req3 Reg 4 Reg 5 Reg 6 Reg 6B 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. (Round "Unit sales to break even" to the nearest whole unit and other answers to 2 decimal places.) 40.00% CM Ratio Unit sales to break even Degree of operating leverage 26,600 balls 10.00 KKNI Req 2 > In sens 42,000 balls (the same number as sold year). Prepare a contribution format income statement and compute the degree of operatif average Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 Reg 4 Reg 5 Req 6A Req 6B 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, $154,000, as last year? (Round your answer to the nearest whole unit.) Number of balls Reg 1 Reg 2 Reg 3 Reg 4 Req Reg 6 Reg 63 Refer again to the data in (2) above. The president feels that the company 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 1a), what selling price per ball must it charge next year to cover the increased labor costs? (Round your answer to 2 decimal places.) Selling price w this question by entering your answers in the tabs below. Req 1 Req 2 Reg 3 Reg 4 Reg 5 Reg 6 Reg 6B Refer to the original data. The company is discussing the construction of a new, automated manufacturing plant. The now 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 "Unit sales to break even" to the nearest whole unit.) Show less CM Ratio Unit sales to break even balls & Req4 Req6A > Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 Reg 4 Reg Req 6A Reg 6B If the new plant is built, how many balls will have to be sold next year to earn the same net operating income, $154,000, as last year? (Round your answer to the nearest whole unit.) Number of balls
