Saved Northwood Company manufactures basketballs. The company has a ball that sells for $25 At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $15.00 per ball of which 60% is direc labor cost Last year, the company sold 38,000 of these balls, with the following results: 51:32 A OK Sales (38.000 balls) Variable expension Contribution margin Fixed expenses Not operating income $ 950,000 $70,000 380,000 264,000 116,000 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 doto 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, $116,000, as last year? 4. Refer again to the data in (2) above The president feels that the company must raise the selling price of its basketballs Northwood Company wants to maintain the same CM to as last year las computed in requirement to). what selling price perball 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 4000% but it would cause fixed expenses per yoor to double. If the new plants built what would be the company's new CM ratio and new break even point in balls? 6 Refer to the data in (5) above a. If the new plant is budt how many balls will have to be sold next year to earn the sanse net operating income, $116.000, as last year? b. Assume the new plant is built and that next year the company manufactures and sells 38.000 balls the same number as sold last year). Prepare a contribution format income statement and compute the degree of operating foverage Prov 1 of 3 Next > 1 Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball is manufactured in a small plant that relies 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 38,000 of these balls, with the following results BOOK Sales 30,000 balls) Variable expenses Contribution margin Fixed expen Het operating income $ 550,000 $70,000 300,000 264.000 $ 116.000 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 $25.00, what will be next year's CM ratio and the break-even point in 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. $116,000, as last year? 4. Refer again to the data in (2) above. 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 perball 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 foed 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 (5) above. a. If the new plant is built how many balls will have to be sold next year to earn the same net operating income. $116,000, as last year? b. Assume the new plant is built and that next year the company manufactures and sells 38.000 balls (the same number as sold lost 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. Reg 1 Reg 2 Req3 Reg4 Reqs Req6A Reg 68 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 "unct sales to break even to the nearest whole unit and other anses to 2 decimal places.) CM Ratio balls Unit sales to break even Degree of operating leverage R2 > CHAPTER 5 PROBLEMS Saved 1 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 would be the company's new CM ratio and new break-even point in balls? 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 earn the same net operating income. $116.000, as lasty b. Assume the new plant is built and that next year the company manufactures and sells 38,000 balls (the same number as sold lo year). Prepare a contribution format income statement and compute the degree of operating leverage. 804930 Complete this question by entering your answers in the tabs below. book Reg 1 Reg 2 Reg2 Req Reqs Re GA Reg 68 Due to an increase in labor rates, the company estimates that next year's variable expenses will increase by $3.00 per bal If this change takes place and the selling price perbal 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 unit sales to break even to the nearest whole Show less CM Ratio Unit sales to break even Das CHAPTER 5 PROBLEMS 1 1 8 04.8901 year to earn the same net operating income, $116,000, as last year? 4. Refer again to the data in (2) above. 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 to what selling price per bal 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 would be the company's new CM ratio and new break-even point in balls? 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 earn the same net operating income, $116.000, as last ye b. Assume the new plant is built and that next year the company manufactures and sells 38.000 balls (the same number as sold las year). Prepare a contribution format income statement and compute the degree of operating leverage Book Complete this question by entering your answers in the tabs below. Regs Reg 68 Reg 1 Reg 2 Req3 Reg 4 Req Refer to the data in Required (2). If the expected change in variable expenses takes place, how many bals will have to be sold next year to earn the same net operating income, $116,000, as last year? (Round your answer to the nearest whole unit.) Number of babe Seved 1 84 www.Away we w year to earn the same net operating income, $116,000, as last year? 4 Refer again to the data in (2) above. 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 to 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, w would be the company's new CM ratio and new break-even point in balls? 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 earn the same net operating income, $116,000, os last ye b. Assume the new plant is built and that next year the company manufactures and sells 38,000 balls (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. Reg 1 Reg 2 Req3 Red 4 Reg 5 ROG SA Reg 6 Refer again to the data in Required (2). The president feels that the company must raise the selling price of its basketbal If Northwood Company wants to maintain the same CM ratio as last year (as computed in requirement 15), what selling price per ball must it charge next year to cover the increased labor costs? (Round your answer to 2 decimal places.) 1 1 8 04337 www.yo.... year to earn the same net operating income, $116,000, as last year? 4 Refer again to the data in (2) above. The president feels that the company must raise the selling price of its basketbolls. I Northwood Company Wants to maintain the same CM ratio as last year (as computed in requirement 10), 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, w would be the company's new CM ratio and new break-even point in balls? 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 earn the same net operating income, $116,000, as last yea b Assume the new plant is built and that next year the company manufactures and sells 38.000 balls the same number as sold last year). Prepare a contribution format income statement and compute the degree of operating leverage Book Complete this question by entering your answers in the tabs below. Feg1 Reg 2 Reg 3 Reg4 res Reg 6 Reg 60 Refer to the original data. The company is discussing the construction of a new, automated manufacturing plant. The new plant would stash 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 bats (Round CH Ratio to 2 decimal places and unit sales to break even to the nearest whole unit) Show less CM Ratio Unit sales to break even bales CHAPTER 5 PROBLEMS Sod 1 1 0944 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. S116,000, as last year? 4. Refer again to the data in (2) above. The president feels that the company must raise the selling price of its basketbolls. 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 foved expenses per year to double if the new plant is built, w would be the company's new CM ratio and new break-even point in balls? 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 earn the same net operating income, $116.000, as last ye b. Assume the new plant is built and that next year the company manufactures and sells 38,000 balls (the same number as sold last year). Prepare a contribution format income statement and compute the degree of operating leverage eBook Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg Reg Regs IA Regte If the new plant is built, how many balls will have to be sold next year to earn the same net operating income, $116,000. as last year? (Round your answer to the nearest whole unit.) number of bats 1 1 04.5432 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 ne year to earn the same net operating income, $116,000, as last year? 4 Refer again to the data in (2) above. 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 bal 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, would be the company's new CM ratio and new break even point in bells? 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 earn the same net operating income: $116,000, as lasty b. Assume the new plant is built and that next year the company manufactures and sells 38.000 balls the same number as sold los year). Prepare a contribution format income statement and compute the degree of operating leverage Book Complete this question by entering your answers in the tabs bekow. Reg 1 Reg 2 Rog 3 RoQ4 ROS Req Assume the new plant is built and that next year the company manufactures and sets 38,000 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 Contration Income Statement 0 5 0 Degree of operating leverage