Northwood Company manufactures basketballs. The company has a ball that sells for $36. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $25.20 per ball, of which 70% is direct labor cost. Last year, the company sold 55,000 of these balls, with the following results: Sales (55,000 balls) $1,980,000 Variable expenses 1,386,000 Contribution margin Fixed expenses 594,000 540,000 Net operating income $ 54,000 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 2. Due to an increase in labor rates, the company estimates that variable expenses will increase by $2.16 per ball next year. If this change takes place and the selling price per ball remains constant at $36.00, what will be the new CM ratio and break-even point in balls? (Do not round intermediate calculations. Round up your final break even answers to the nearest whole number.) CM Ratio Unit sales to break even % balls 3. Refer to the data in (2) above. 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, $54,000, as last year? (Do not round intermediate calculations. Round your answer to the nearest whole unit.) Number of balls