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 58,000 of these balls, with the following results: Sales (58,000 balls) $ 1,450,000 Variable expenses 870,000 Contribution margin 580,000 Fixed expenses 374,000 Net operating income $ 206,000 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 years sales level. 2. Due to an