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 32250 of these balls, with the following results: Sales (32,259 balls) $ 896,256 Variable expenses 483,759 Contribution margin 322,566 Fixed expenses 222,666 Net: operating income $ 993999 Required: 1. Compute (a) last year's CM ratio and the breakeven point in balls, and {b} the degree of operating leverage at last year's sales level. 2. Due to an increase in labor rates, the company estimates that next year's variable expenses will increase by $3.00 per ball. lfthis change takes place and the selling price per ball remains constant at $25.00, what will be next year's CM ratio and the breakeven point in balls? 3. Qefer to the data in requirement 2. lfthe expected change in variable expenses takes place, how many balls will have to be sold next year to earn the same net operating income, $99,900, as last year? 4. Qefer again to the data in requirement 2. The president feels thatthe 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 yearto cover the increased labor costs? 5. Refer to the original data. The company is discussing the construction ofa new. automated manufacturing plant. The new plant would slash variable expenses per ball by 40.00%, but it would cause xed expenses per year to double. lfthe new plant is built, what would be the company's new CM ratio and new break-even point in balls? 6. Qefer to the data in requirement 5. a lfthe new plant is built, how many balls will have to be sold next yearto earn the same net operating income, $99,900. as last year? 3. Assume the new plant is built and that next year the company manufactures and sells 32,250 balls (the same number as sold last year}. Prepare a contribution format income statement and compute the degree of operating leverage. Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3 Reg 4 Reg 5 Reg 631 Reg 63 Compute {a} last year's CM ratio and the breakeven point in balls, and (b) the degree of operating leverage at last year's sales level. (Round "Unit sales to break evenll up to the nearest whole unit and other answers to 2 decimal places.) CM Ratio Orin Unit sales to break even balls Degree of operating leverage Complete this queslion by entering your answers in the tabs below. Rep 1 Req 2 Rep 3 Req 4 Rep 5 Rec] 69. Req EB Due to an increase in labor rates, the companyr estimates that next year's variable expenses will increase by 53.00 per ball. If this change takes place and the selling price per ball remains constant at $25.00I what will be next year's CM ratio and the breakeven point in balls? (Round "CM Ratio" to 2 decimal places and round "Unit sales to break even" up to the nearest whole unit.) Show lessa. CM Ratio U nit sales to brea k even Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Req 4 Req 5 Req 6A Req 6B Refer to the data in requirement 2. 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, $99,900, as last year? (Round your answer up to the nearest whole unit.) Number of balls Complete this question by entering your answers in the tabs below. Red 5 Req 6A Req as Refer again to the data in requirement 2. The president Feels that the company must raise the selling price of its basketballs. It Northwood Companyr 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.) Complete this question by entering your answers in the tabs below. Req 6A Req EB Refer to the original data. The company is discussing the construction of a new, automated manufacturing plant. The new plant would slash variable expenses per ball by 40.00%, but it would cause xed 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 round "Unit sales to break ewen'I up to the nearest whole unit.) Show lessL Complete this question by entering your answers in the tabs below. Req 1 Rec] 2 Req 3 Req 4 Rec] 5 Req Il Rec] 63 Refer to the data in requirement 5. If the new plant is built, how many balls will have to be sold next year to earn the same net operating income, $99,900, as last year? (Round your answer up to the nearest whole unit.) :I Complete this queslion by entering your answers in re tabs below. RED 1 Ken 2 Req 3 RED 4 Ken 5 Ken 6A REE] 63 Refer to the data in requirement 5. Assume the new plant is built and that next year the companyr manufactures and sells 32,250 balls (the same number as sold last year]. Prepare a contribution format income statement and compute the degree of operating leverage. (Round "Degree of operating leverage" to 2 decimal places.) ( Req BA