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 abot cost Last year, the company sold 64,000 of these bols, with the following results Sales (64,000 balls) Variable expenses Contribution margin Fixed expenses Net operating Incore $1,600,000 640,00 4270 $213,000 Required: 1. Computea) last year's CM ratio and the break-even point in balls, and 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 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 above the expected change in variable expenses takes place, how many bats will have to be solde year to earn the same net operating income, $213.000, 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 basketball Northwood Company wants to maintain the same CM ratio as last year as computed in requirement to what selling price per bal 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 fred expenses per year to double the new plant is built what would be the company's new CM ratio and new break even point in balls? if the new plant is built, how many balls will have to be sold next year to eam the same net operating income, $213.000, as year? Assume the new plant is built and that next year the company manufactures and ses 64000 bits the same number is sold in 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. 41 H Prey Next > dtv A R S G H