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 44,000 of these balls, with the following results: Sales (44,000 balls) Variable expenses Contribution margin Fixed expenses Net operating income $1,100,000 660,000 440,000 317,000 $ 123,000 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. $123,000, 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. If Northwood Company wants to maintain the same CM ratio as last year (as computed in requirement ta), what selling price per ball 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 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 bali 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? 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, $123,000, as last year? 6. Assume the new plant is built and that next year the company manufactures and sells 44,000 balls (the same number as sold last 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. Req1 Req2 Rega Reg 4 Reg 5 Req6A Raq 68 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. (Round "Unit sales to break even" to the nearest whole unit and other answers to 2 decimal places.) CM Ratio Unit sales to break even Degree of operating leverage % balls WOULOS y Mail Wom 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? 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, $123,000, as last year? b. Assume the new plant is built and that next year the company manufactures and sells 44,000 balls (the same number as sold last 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. Req 1 Reg 2 Reg 3 Req4 Reqs Req 6A Req 68 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 Ratio" to 2 decimal places and Unit sales to break even to the nearest whole unit.) CM Ratio Unut sales to break even % balls 5. Keter to the originai gata, ine company is discussing the construction of a new, automatea manutacturing plant ine 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 b 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, $123,000, year? b. Assume the new plant is built and that next year the company manufactures and sells 44,000 balls (the same number as 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. Req1 Reg 2 Req3 Req 4 Reqs Req 6A Reg 68 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, $123,000, as last year? (Round your answer to the nearest whole unit.) Number of balls a. If the new plant is built, how many balls will have to be sold next year to earn the same net operating income, $123,000, as last year? b. Assume the new plant is built and that next year the company manufactures and sells 44,000 balls (the same number as sold last 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. Req 1 Req 2 Reg 3 Req Reg 5 Req 6A Reg 60 Refer again to the data in (2) above. The president feels that the company must raise the selling price of its basketballs. If Northwood Company wants to maintain the same CM ratio as last year (as computed in requirement la), what selling price per ball must it charge next year to cover the increased labor costs? (Round your answer to 2 decimal places.) Selling price MUU W WAM UM 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, $123,000, year? b. Assume the new plant is built and that next year the company manufactures and sells 44,000 balls (the same number as 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. Reg 1 Reg 2 Req3 Req 4 Reqs Req 6A Req 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 balls? (Round "CM Ratio" to 2 decimal places and "Unit sales to break even" to the nearest whole unit.) Show less CM Ratio Unit sales to break even % balls 5. Refer to the original data, ine company is discussing the construction on a new, automatea manufacturing plant ine new piar 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 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 $123,000, as year? b. Assume the new plant is built and that next year the company manufactures and sells 44,000 balls (the same number as so 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. Req1 Req 2 Req3 Req4 Reg 5 Req 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, $123,000, as last year? (Round your answer to the nearest whole unit.) Number of balls year b. Assume the new plant is built and that next year the company manufactures and sells 44,000 balls (the same number as sold 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. Req1 Req2 Req3 Req4 Reqs Req A Reg 68 Assume the new plant is built and that next year the company manufactures and sells 44,000 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 Degree of operating leverage Miller Company's contribution format income statement for the most recent month is shown below: Sales (37,000 units) Variable expenses Contribution margin Fixed expenses Net operating income Total $ 370,000 259,000 111,000 43,000 $ 68,000 Per Unit $10.00 7.00 $ 3.00 Required: (Consider each case independently 1. What is the revised net operating income if unit sales increase by 11%? 2. What is the revised net operating income if the selling price decreases by $1.40 per unit and the number of units sold increases by 22%? 3. What is the revised net operating income if the selling price increases by $1.40 per unit, fixed expenses increase by $8,000, and the number of units sold decreases by 5%? 4. What is the revised net operating income if the selling price per unit increases by 20%, variable expenses increase by 20 cents per unit, and the number of units sold decreases by 11%? 1 Not operating income 2. Net operating income Sales (37,000 units) Variable expenses Contribution margin Fixed expenses Net operating income $ 370,000 259,000 111,000 43,000 $ 68,000 $10.00 7.00 $ 3.00 Required: (Consider each case independently 1. What is the revised net operating income if unit sales increase by 11%? 2. What is the revised net operating income if the selling price decreases by $1.40 per unit and the number of units sold increases by 22%? 3. What is the revised net operating income if the selling price increases by $1.40 per unit, fixed expenses increase by $8,000, and the number of units sold decreases by 5%? 4. What is the revised net operating income if the selling price per unit increases by 20%, variable expenses increase by 20 cents per unit, and the number of units sold decreases by 11%? 1 Net operating income 2 Net operating income 3. Net operating income 4. Net operating income Lucido Products markets two computer games Claimjumper and Makeover. A contribution format income statement for a recent month for the two games appears below. Sales Variable expenses Contribution margin Fixed expenses Net operating income Claim jumper $110,000 40.500 $ 60,400 Makeover $ 55,000 8.900 $ 46, 100 Total $ 165,000 49,500 115,500 78.330 $ 37,170 Required: 1. What is the overall contribution margin (CM) ratio for the company? 2. What is the company's overall break-even point in dollar sales? 3. Prepare a contribution format income statement at the company's break even point that shows the appropriate levels of sales for the two products Complete this question by entering your answers in the tabs below. Required! Required 2 Required 3 What is the overall contribution margin (CM) ratio for the company? Sales Variable expenses Contribution margin Fixed expenses Net operating income claimjumper $110,000 40,600 $ 69, 400 Makeover $ 55,000 8.900 $ 46,100 Total $ 165,000 49,500 115,500 78,330 $37.170 Required: 1. What is the overall contribution margin (CM) ratio for the company? 2. What is the company's overall break-even point in dollar sales? 3. Prepare a contribution format income statement at the company's break-even point that shows the appropriate levels of sales for the two products Complete this question by entering your answers in the tabs below. Required: Required 2 Required 3 What is the overall contribution margin (CM) ratio for the company? Overal CM ratio % Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What is the company's overall break-even point in dollar sales? (Do not round intermediate calculations.) Overall break even point Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare a contribution format income statement at the company's break-even point that shows the appropriate levels of sales for the two products. (Do not round intermediate calculations. Round your answers to the nearest dollar amount.) Lucido Products Contribution Income Statement Claimjumper Makeover Total $ 0 0 $ 0 $ 0 0 Net operating income (loss)