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 46,000 of these balls, with the following results: $ Sales (46,000 balls) Variable expenses Contribution margin Fixed expenses Net operating income 1,150,000 690,000 460,000 318,000 142,000 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 yea 2. Due to an increase in labor rates, the company estimates that next year's variable expenses will increase by $3.00 pe change takes place and the selling price per ball remains constant at $25.00, what will be next year's CM ratio and the 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 year to earn the same net operating income, $142,000, as last year? 4. Refer again to the data in (2) above. The president feels that the company must raise the selling price of its basketballs Northwood Company wants to maintain the same CM ratio as last year (as computed in requirement fa), what selling price must it charge next year to cover the increased labor costs? 5. Refer to the original data. The company is discussing the construction of a new, automated manufacturing plant. The new would slash variable expenses per ball by 40.00%, but it would cause fixed expenses per year to double. If the new plant is would be the company's new CM ratio and new break-even point in balls? 6. Refer to the data in (5) above. a. If the new plant is built, how many balls will have to be sold next year to earn the same net operating income. $142.000, a b. Assume the new plant is built and that next year the company manufactures and sells 46,000 balls (the same number ass year). Prepare a contribution format income statement and compute the degree of operating leverage