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