Question: ? I only need the answer for #5 and #6. Northwood Company manufactures basketballs. The company has a ball that sells for S35. At present,

?I only need the answer for #5 and #6. Northwood Company manufacturesbasketballs. The company has a ball that sells for S35. At present,?the ball is manufactured in a small plant that relies heavily onI only need the answer for #5 and #6.

Northwood Company manufactures basketballs. The company has a ball that sells for S35. At present, the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus, variable expenses are high, totaling $21.00 per ball, of which 60% is direct labor cost. Last year, the company sold 41,000 of these balls, with the following results: Sales (41,000 ba s) Varable expenses Contribution margin 1,435.000 861,000 574,000 Fixed expenses 420,000 Net operating income154,000 Required: 1-a.Compute the CM ratio and the break-even point in ba s. (Do not round intermediate calculations.) 40% CM Ratio Unit sales to break 30,000 1-b.Compute the the degree of operating leverage at last year's sales level. Round your answer to 2 decimal places.) 3. 2. Due to an increase in labor rates, the company estimates that variable expenses will increase by S2.80 per ba next year. If this change takes place and the selling price per ball remains constant at $35.00, what will be the new CM ratio and break-even point in balls? (Do not round intermediate calculations.) CM Ratio Unit sales to bk37,500 bals 32%

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!