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 30,750 of these balls, with the following results Required: 1. Compute (o) last year's CM ratio and the breakeven point in bahs, and (b) the degree of operating ieverage at last year's sales feve 2. Due to an incrense in labor rotes, the company estimates that next year's varlable expenses will increase by 5300 per bali. If this change takes place and the seling price per ball remains constant at $2500, what wilt be next year's CM ratio and the break-even point in balis? 3. Refer to the data in requirement2 ir the expected change in variable expenses takes place. how many balls wil have to be soid next year to earn the same net operoting income, 593300 , os lost yeat? 4. Reter sgain to the date in requiement 2. Ine president feels that the company mustaise the seling price of its basketbalis. if Northwood Company wants to maintain the same CM ratio as lastyea (as computed in requirement la), what seifing price per bail must it charge next year to cover the increased labor costs? 5. Refet to the onginal data. The company is discusung the construction of a netw automated manifectunng plant. The new plant would slash vahable expenses per bali by 4000% but it would caure foxed expenses peryear to double. If the new plant is buitt what would be the compony s new CM ratio arid nev breskeven point in bails? 6. Refer to the data in requicment 5 a if the new plant is buile hiow many bals wit have to be sold noxt yedc to cam the same niet onerating income' 599 a00-ast last. Last year, the company sold 30,150 of these balls, with the fotlowing results Required: 1 Compute (a) last year's CM ratio and the break-even point in balis, 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 53.00 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 requirement 2 . 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, $93,300, as last year? 4. Refer again to the dato in requirement 2 The president feeis that the company must raise the selling price of its basketballs. If Northwood Company wants to maintain the same CM ratio as lost year (os computed in requirement 1a), what selling price per bali 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. autornated manufacturing plant. The new plant would siash vanable expenses per boll by 40,00 but it would cpuse fixed expenses per year to double if the new plant is buit, what would be the company's new CM rato and new breakeven point in bail?? 6. Refer to the data in requirement 5 b. If the new ptant is bualt how many balis will have to be sold next yeat to eam the same net operating income, $93300, as last year? 6. Assume the new plant is buit and that next year the companymonufactures and seis 30,750 balls (the same number as sold tast year). Prepsie a conthbution format income statement and compute the cechlee of operating leverage