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Northwood Company manufactures basketballs. The company has a ball that sells for $37. At present, the ball is manufactured in a small plant that relies
Northwood Company manufactures basketballs. The company has a ball that sells for $37. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $25.90 per ball, of which 70% is direct labor cost. Last year, the company sold 43,000 of these balls, with the following results: Sales (43,000 balls) Variable expenses $1,591,000 1,113,700 Contribution margin Fixed expenses 477,300 277,500 Net operating income $199,800 Required 1-a. Compute last year's CM ratio and the break-even point in balls. (Do not round intermediate calculations.) CM Ratio Unit sales to break even calles 1-b. Compute the the degree of operating leverage at last year's sales level. (Round your answer to 2 decimal places.) Degree of operating leverage
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