Problem 5-20 CVP Applications: Break-Even Analysis; Cost Structure; Target Sales [LO5-1, LO5-3 LO5-4, LO5-5, LO5-6, LO5-8 Northwood Company manufactures basketballs. The company has a ball that sells for $30. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, vanable expenses are high, totaling $2100 per ball of which 70%S direct labor cost Last year, the company sold 53,000 of these bals, with the following results Sales (53,089 balls) Variable expenses Contribution nargin Fixed expenses $1,598,800 1,113,800 477,800 378,e08 Net operating income 99,000 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 years variable expenses will increase by $1 50 per ball if this change takes place and the selling price per ball remains constant at $30.00, what will be next years CM ratio and the break even point in balls? 3 Reter to the data in (2) above. If the expected change in variable expenses takes place, how many balls will have to be sold next NM Ad