Problem 3-20 Various CVP Questions: Break-Even Point: Cost Structure: Target Sales [LO 3-1, LO 3-3, LO 3-4,LO 3-5. LO 3-6, LO 3-81 Northwood Company manufactures basketballs. The company has a ball that sells for $49. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $34.30 per ball, of which 70% is direct labor cost. Last year, the company sold 58,000 of these balls, with the following results: Sales (58.000 balls) Variable expenses Contribution margin Fixed expenses Net operating income $2.842,000 1,989.400 852.600 705,600 $ 147.000 6. Refer to the data in (5) above. a. If the new plant is built, how many balls will have to be sold next year to eam the same net operating income. $147,000, as last year? (Do not round intermediate calculations. Round your answer to the nearest whole unit.) Number of balls b-1. Assume the new plant is built and that next year the company manufactures and sells 58,000 balls (the same number as sold last year). Prepare a contribution format income statement (Do not round your intermediate calculations.) Northwood Company Contribution Income Statement b-2. Compute the degree of operating leverage. (Do not round intermediate calculations and round your final answer to 2 decimal places.) Degree of operating leverage