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Question No. 3: Northwood Company manufactures basketballs. The company has a ball that sells for...

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Accounting

Question No. 3:

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 per ball, of which 60% is direct labor cost.

Last year, the company sold 30,000 of these balls, with the following results:

image
CoursHeroTranscribedText: Sales (30,000 balls) . . . $750,000 Variable expenses. . . . . . 450,000 Contribution margin . . . . 300,000 Fixed expenses . .. . . 210,000 Net operating Income. . $ 90,000

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