Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball ismanufactured In a small plant that reles heavily on direct labor workers. Thus, varlable expenses are hligh, totaling $15.00per ball, of which 60% Is direct labor costLast year, the company sold 62.000 of these balls, with the following results:Sales (62,809 balls)Variable expensesContribution marginFixed expenses$ 1,550, e00930,000620,e00426,000$ 194, e00Net operating incomeRequired:1. Compute (a) last year's CM ratio and the break-even polnt in balls, and (b) the degree of operating leverage at last year'ssales level.2 Due to an Increase In labor rates, the company estimates that next year's varlable expenses will Increase by $3.00 perball. If this change takes place and the selling price per ball remalns constant at $25.00, what will be next year's CM ratioand the break-even polnt In balls?3. Refer to the data in (2) above. If the expected change In varlable expenses takes place, how many balls will have to besold next year to eam the same net operating Income, $194,000, as last year?4. Refer agaln to the data In (2) above. The president feels that the company must ralse the selling price of Its basketballs.If Northwood Company wants to malntaln the same CM ratio as last year (as computed In requirement la), what sellingprice per ball must It charge next year to cover the Increased labor costs?5. Refer to the orlginal data. The company is discussing the construction of a new, automated manufacturing plant. Thenew plant would slash varlable expenses per ball by 40.00%, but It would cause fixed expenses per year to double. If thenew plant Is built, what would be the company's new CM ratio and new break-even polnt in balls?6. Refer to the data In (5) above.a. If the new plant is bult, how many balls will have to be sold next year to earn the same net operating Income.$194.000, as last year?b. Assume the new plant is bullt and that next year the company manufactures and sells 62,000 balls (the same numberas 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.Req 1Req 2Req 3Req 4Req 5Req 6AReg 68Refer again to the data in (2) above. The president feels that the company must raise the selling price of its basketballs. IfNorthwood Company wants to maintain the same CM ratio as last year (as computed in requirement 1a), what selling priceper ball must it charge next year to cover the increased labor costs? (Round your answer to 2 decimal places.)Selling price Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball ismanufactured in a small plant that reles heavily on direct labor workers. Thus, varlable expenses are high, totaling $15.00per ball, of which 60% Is direct labor costLast year, the company sold 62.000 of these balls, with the following results:Sales (62,809 balls)Variable expensesContribution marginFixed expenses$ 1,558, 000930,e00620, e00426,e00Net operating income$ 194, e00Required:1. Compute (a) last year's CM ratio and the break-even polnt In balls, and (b) the degree of operating leverage at last year'ssales level.2 Due to an Increase In labor rates, the company estimates that next year's varlable expenses will increase by $3.00 perball. If this change takes place and the selling price per ball remalns constant at $25.00, what will be next year's CM ratioand the break-even polnt In balls?3. Refer to the data in (2) above. If the expected change In varlable expenses takes place, how many balls will have to besold next year to eam the same net operating Income, $194,000, as last year?4. Refer agaln to the data In (2) above. The president feels that the company must ralse the selling price of Its basketballs.If Northwood Company wants to malntaln the same CM ratio as last year (as computed in requirement 1a), what sellingprice per ball must it charge next year to cover the Increased labor costs?5. Refer to the orlginal data. The company is discussing the construction of a new, automated manufacturing plant. Thenew plant would slash varlable expenses per ball by 40.00%, but It would cause fixed expenses per year to double. If thenew 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 bult, how many balls wll have to be sold next year to earn the same net operating income.$194.000, as last year?b. Assume the new plant is bult and that next year the company manufactures and sells 62.000 balls (the same numberas 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.Req 1Req 2Req 3Req 4Req 5Reg 6AReg 68Refer to the data in (2) above. If the expected change in variable expenses takes place, how many balls will have to be soldnext year to earn the same net operating income, $194,000, as last year? (Round your answver to the nearest whole unit.)Number of balls

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