Welcon signment Sav Problem 5-20 CVP Applications: Break-Even Analysis; C 4, LO5-5, LO5-6, LO5-8] Northwood Company manufactures basketballs. The company has a ball small plant that relies heavily on direct labor workers. Thus, variable expe labor cost. Last year, the company sold 30,000 of these balls, with the following resul Sales (30,000 balls) Variable expenses Contribution margin Fixed expenses Net operating income $ 750,000 450,000 300,000 210,000 $ 90,000 Required: 1. Compute (a) last year's CM ratio and the break-even point in balls, and (b) 2. Due to an increase in labor rates, the company estimates that next year's change takes place and the selling price per ball remains constant at $25, W in balls? 3. Refer to the data in (2) above. If the expected change in variable expenses year to earn the same net operating income, $90,000, as last year? 4. Refer again to the data in (2) above. The president feels that the company Northwood Company wants to maintain the same CM ratio as last year (as ce 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 would slash variable expenses per ball by 40%, but it would cause fixed expe 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 ear WJ Munuiulules Daskeballs. The small plant that relies heavily on direct labor workers. labor cost. Last year, the company sold 30,000 of these balls, wit Sales (30,000 balls) Variable expenses Contribution margin Fixed expenses Net operating income $ 750,000 450,000 300,000 210,000 $ 90,000 Required: 1. Compute (a) last year's CM ratio and the break-even 2. Due to an increase in labor rates, the company estim. change takes place and the selling price per ball remain Welcon signment Sav Problem 5-20 CVP Applications: Break-Even Analysis; C 4, LO5-5, LO5-6, LO5-8] Northwood Company manufactures basketballs. The company has a ball small plant that relies heavily on direct labor workers. Thus, variable expe labor cost. Last year, the company sold 30,000 of these balls, with the following resul Sales (30,000 balls) Variable expenses Contribution margin Fixed expenses Net operating income $ 750,000 450,000 300,000 210,000 $ 90,000 Required: 1. Compute (a) last year's CM ratio and the break-even point in balls, and (b) 2. Due to an increase in labor rates, the company estimates that next year's change takes place and the selling price per ball remains constant at $25, W in balls? 3. Refer to the data in (2) above. If the expected change in variable expenses year to earn the same net operating income, $90,000, as last year? 4. Refer again to the data in (2) above. The president feels that the company Northwood Company wants to maintain the same CM ratio as last year (as ce 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 would slash variable expenses per ball by 40%, but it would cause fixed expe 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 ear WJ Munuiulules Daskeballs. The small plant that relies heavily on direct labor workers. labor cost. Last year, the company sold 30,000 of these balls, wit Sales (30,000 balls) Variable expenses Contribution margin Fixed expenses Net operating income $ 750,000 450,000 300,000 210,000 $ 90,000 Required: 1. Compute (a) last year's CM ratio and the break-even 2. Due to an increase in labor rates, the company estim. change takes place and the selling price per ball remain