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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 relles
Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in a small plant that relles 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 52,000 of these balls, with the following results: Sales (52,000 balls) Variable expenses Contribution margin Fixed expenses Net operating income $1,300,000 780.000 520.000 321.000 5 199,000 Required: 1. 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, 2. Due to an increase in labor rates, the company estimates that next year's variable expenses will increase by $3.00 per ball. If this change takes place and the selling price per ball remains constant at $25.00, what will be next year's CM ratio and the break-even point in balls? 3. 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, $199,000, as last year? 4. 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 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 bals? Required: 1. 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 2. Due to an increase in labor rates, the company estimates that next year's variable expenses will increase by $3.00 per ball. If this change takes place and the selling price per ball remains constant at $25.00, what will be next year's CM ratio and the break-even point in balls? 3. 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, $199,000, as last year? 4. 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 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? Complete this question by entering your answers in the tabs below. Req 1 Reg 2 Req3 Reg 4 Compute(a) last year's CM ratio and the break-even point in bolls, 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) CM Ratio balls Unit sales to break even Degree of operating leverage Complete this question by entering your answers in the tabs below. Reg 1 keq 2 Reg 3 Reg 4 Due to an increase in labor rates, the company estimates that next year's variable expenses will increase by $3.00 per ball. If this change takes place and the selling price per ball remains constant at $25.00, what will be next year's CM ratio and the break-even point in balls? (Round "CM Rato" to 2 decimal places and "Unit sales to break even" to the nearest whole unit.) CM Ratio Unit sales to break even % balls Complete this question by entering your answers in the tabs below. Req 1 Reg 2 Req 3 Req 4 Refer to the data in (2) above. If the expected change in variable expenses takes place, how many next year to earn the same net operating income, $199,000, as last year? (Round your answer to the Number of balls Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req3 Req 4 Refer to the original data. The company is discussing the construction of a new, autom. plant would slash variable expenses per ball by 40.00%, but it would cause fixed exper plant is built, what would be the company's new CM ratio and new break-even point in places and "Unit sales to break even" to the nearest whole unit.) CM Ratio % Unit sales to break even balls
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