Northwood Company manufactures basketballs. The company has a ball that sells for $42. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $25.20 per ball, of which 60% is direct labor cost

Last year, the company sold 60,000 of these balls, with the following results:

Sales (60,000 balls)	$	2,520,000
Variable expenses		1,512,000
Contribution margin		1,008,000
Fixed expenses		840,000
Net operating income	$	168,000

Required:

1-a.	Compute the CM ratio and the break-even point in balls. (Do not round intermediate calculations.)

1-b.	Compute the the degree of operating leverage at last year