oped Book Writ Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in a small plant that relles 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 30,250 of these balls, with the following results: Sales (30,250 balls) Variable expenses Contribution margin Fixed expenses Net operating income $ 756,250 453,750 302,500 211,400 $91,100 5 points Skipped eBook Print References 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. Due to an increase in labor rates, the company estimates that next year's variable expenses will increase by $3.00 per ball. If this change takes place and the selling price per ball remains constant at $25.00, what will be next year's CM ratio and the break-even point in balls? 3. Refer to the data in requirement 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, $91,100, as last year? 4. 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 per ball must it charge next year to cover the increased labor costs? 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 would be the company's new CM ratio and new break-even point in balls? 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, $91,100, as last year? b. Assume the new plant is built and that next year the company manufactures and sells 30,250 bails (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. 5 points Complete this question by entering your answers in the tabs below. Skipped Req 1 Req 2 Req 3 Req 4 Req 5 Req 6A Req 6B eBook 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.) Hint CM Ratio Print Unit sales to break even % balls References Degree of operating leverage boints Complete this question by entering your answers in the tabs below. Skipped Req 1 Req 31 Req 41 Req 5 Req 6A Req 68 Req 2 Due to an increase in labor rates, the company estimates that next year's variable expenses will increase by $3.00 per ball. If this change takes place and the selling price per ball remains constant at $25.00, what will be next year's CM ratio and the break-even point in balls? (Round "CM Ratio" to 2 decimal places and round "Unit sales to break even" up to the nearest whole unit.) eBook Hint Print References CM Ratio Unit sales to break even balls > Show less A points Complete this question by entering your answers in the tabs below. Skipped Req 1 Req 2 Req 3 Req 41 Req S Req 6A Req 68 Refer to the data in requirement 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, $91,100, as last year? (Round your answer up to the nearest whole unit.) ellook Hint Print References Number of balls 1 5 points year! b. Assume the new plant is built year). Prepare a contribution format income statement Complete this question by entering your answers in the tabs below. Skipped Req 1 Req 2 Req 3 Req 4 Req 5 Req 6A Req 68 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 per ball must it charge next year to cover the increased labor costs? (Round your answer to 2 decimal places.) ellook Het P Selling price References 5 points Complete this question by entering your answers in the tabs below. Skipped Req 1 Req 2 Req 3 Req 4 Req 5 Req 6A Req 68 ellook Hint Port References 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 would be the company's new CM ratio and new break-even point in balls? (Round "CM Ratio" to 2 decimal places and round "Unit sales to break even" up to the nearest whole unit.) CM Ratio Unit sales to break even bals Show less A 5 points Complete this question by entering your answers in the tabs below. Skipped Req 1 Req 2 Req 3 Req 4 Req 5 Req 6A Req 68 ellook H 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, $91,100, as last year? (Round your answer up to the nearest whole unit.) Number of balls Print References 5 points Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3 Req 4 Req 5 Req 6A Req 68 Skipped eBook Hint Print References Refer to the data in requirement 5. Assume the new plant is built and that next year the company manufactures and sells 30,250 balls (the same number as sold last year). Prepare a contribution format income statement and compute the degree of operating leverage. (Round "Degree of operating leverage" to 2 decimal places.) Northwood Company Contribution Income Statement Degree of operating leverage