Northwood Company manufactures basketballs. The company has a ball that sells for $49. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $34.30 per ball, ofwhich 70% is direct labor cost Last year, the company sold 58,000 of these balls, with the following results s 2,842,000 1,989,400 Sales (58,000 balls) Variable expenses Contribution margin 852,600 705,600 Fixed expenses Net operating income $147,000 Required: 1-a. Compute the CM ratio and the break-even point in balls. (Do not round intermediate calculations.) CM Ratio 30 % Unit sales to break even 48,000 balls 1-b. Compute the the degree of operating leverage at last year's sales level. (Round your answer to 2 decimal places.) egree of operating everage 5.80 2. Due to an increase in labor rates, the company estimates that variable expenses will increase by $4.90 per ball next year. If this change takes place and the selling price per ball remains constant at $49.00, what will be the new CM ratio and break-even point in balls? (Do not round intermediate calculations.) CM Ratio 20 % Unit sales to break even 72,000 balls