Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the...

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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 36,000 of these balls, with the following results: Variable expenses Contribution margin Sales (36,000 balls) $ 900,000 540,000 360,000 Fixed expenses 263,000 Net operating income $ 97,000 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 36,000 of these balls, with the following results: Variable expenses Contribution margin Sales (36,000 balls) $ 900,000 540,000 360,000 Fixed expenses 263,000 Net operating income $ 97,000