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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 48,000 of these balls, with the following results: Sales (48,000 balls) Variable expenses Contribution margin Fixed expenses Net operating income $ 1,200,000 720,000 480,000 319,000 161,000 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 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, S161,000, 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 10), what selling price per ball 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 (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, $161,000, as last year? b. Assume the new plant is built and that next year the company manufactures and sells 48,000 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. etmeducation.com work: Chapter 6 point in balls? 3. Refer to the data in (2) above 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, $161.000, 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 basketbalist Northwood Company wants to maintain the same CM ratio as last year as 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 in 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 fed 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 buit, how many balls will have to be sold next year to earn the same net operating income, $161,000, as last ye b. Assume the new plant is built and that next year the company manufactures and sells 48,000 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. Reg1 Reg 2 Reg Req Regs Rega Reg Compute(a) last year's Cherati and the break-even point in bots, and (b) the degree of operating leverage at last year's sales tevel. Round Units to treak even to the nearest whole unit and other as to decimal places) CM Ratio Un te breve Degree of dring everage MacBook Air 80 000 4 $ 3 % 5 & Print and compute the degree of operating leverage. as sold last Complete this question by entering your answers in the tabs below. eferences Reg 1 Reg 2 Reg 3 Reg 4 Reg 5 Req 6A Reg 68 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 "Unit sales to break even to the nearest whole unit.) CM Ratio Unit sales to break even balls Reg year). Prepare a contribution format Income statement and compute the degree of operating leverage. Peint Complete this question by entering your answers in the tabs below. References Reg 1 Reg 2 Rocks Reg 4 Reqs Req 6A Req 68 Refer to the data in Required (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, $161,000, as last year? (Round your answer to the nearest whole unit.) Number of balls int mbute the degree of operating leverage. Humber as sold last Complete this question by entering your answers in the tabs below. References Req: Reg 2 Reg 3 Reg 5 Reg 6 Reg 68 Refer again to the data in Required (2). The president foels that the company must raise the selling price of its basketbols. 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.) Selling price ee of operating leverage. as sold las Complete this question by entering your answers in the tabs below. moes Reg 1 Reg 2 Req3 Req4 Reqs Req 6A Reg 68 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 foxed 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 Unit sales to break even to the nearest whole unit.) Show less CM Ratio Unities to break even balls how many balls will have to be sold next year to earn the same net operating income, $161,000, as last b. Assume the new plant is built and that next year the company manufactures and sells 48,000 balls (the same number as sold year). Prepare a contribution format income statement and compute the degree of operating leverage. Print Complete this question by entering your answers in the tabs below. mences Req1 Reg 2 Req3 Req+ Reqs Reg 6A If the new plant is built, how many balls will have to be sold next year to earn the same net operating income, $161,000, as last year? (Round your answer to the nearest whole unit.) Reg 68 Number of balls

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