Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in 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) $ 950,000 Variable expenses 570,000 Contribution margin 380,000 Fixed expenses 264,000 Net operating income $116,000 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 $116,000, as last year? A Reler 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 os computed in requirement 18), what selling price perball 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 plant would slash variable expenses per ball by 4000%, 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? 6. Refer to the data in (5) above. all 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 fast year? 6. Assume the new plant is built and that next year the company manufactures and sells 38.000 balls (the same numberos sold fast year) Prepare a contribution format income statement and compute the degree of operating leverage Complete this question by entering our answers in the taha hem Reg 1 Req 2 Reg 3 Reg 4 Reg 5 Req 6A Reg 6B 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 decima places and "Unit sales to break even to the nearest whole unit.) Show less CM Ratio % Unit sales to break even balls Reg 1 Reg 2 Reg 3 Reg 4 Reg 5 Req6A Reg 68 If the new plant is bullt, 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 Reg 1 Reg 2 Req3 Req4 Req 5 Req 6A Reg 68 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 0 M $ 0 Degree of operating leverage