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 38,000 of these balls, with the following results: Sales (38,000 balls) Variable expenses Contribution margin Tixed expenses Net operating income 950,000 570,000 380,000 264,000 $116,000 Required: Assume the new plant is built and that next year the company manufactures and sells 38,000 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.) Northwood Company Contribution Income Statement I 0 $ 0 Degree of operating leverage Req 1 Reg 2 Reg 3 Reg 4 Reg 5 Reg 6A Req 6B If the new plant is built, how many balls will have to be sold next year to earn the same net operating income, $116,000, as last year? (Round your answer to the nearest whole unit.) Number of balls 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? (Round "CM Ratio" to 2 decimal places and unit sales to break even" to the nearest whole unit) Show less A % CM Ratio Unit sales to break even balls