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 Last year, the company sold 34,250 of these balls, with the following results 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. Dueto incres in point in balls? next year to earn the same net operating income, $108,700, as last year? orthwood Company wants to maintain the same CM ratio as last year (as computed in requirement 1a), what selling price per ball 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 40.00%, but it would cause fixed expenses per year to double. If the new plant is built, what 6 . Refer to the data in requirement 5 . a. If the new plant is built, how many balls will have to be sold next year to earn the same net operating income, $108,700, as last b. Assume the new plant is built and that next year the company manufactures and sells 34,250 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. 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" up to the nearest whole unit and other answers to 2 decimal places.) Refer to the data in reauirement 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, 108,700, as last year? (Round your answer up to the nearest whole Refer again to the data in requirement 2 . 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 1a), what selling price show less Refer to the data in requirement 5. If the new plant is built, how many balls will have to be sold next year to earn the same net operating income, s108, 700, as last year? (RRound your answer up to the nearest whole unit.) Refer to the data in requirement 5. Assume the new plant is built and that next year the company manufactures and sells 34,250 balls (the same number as sold last year). Prepare a contribution format income statement and compute the degree 34,250 balls (the same number as sold last year). Prepare a contribution format income statement and operating leverage. (Round "Degree of operating leverage" to 2 decimal places.)
