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 $15.00 per ball, of which 60% is direct labor cost. Last year, the company sold 30.500 of these balls, with the following results Sales (30,500 balls) Variable expenses Contribution margin Fixed expenses Net operating income $225,000 465,000 310,000 212.000 $ 98,000 Required: 1. Compute (a) last year's CM rabo 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 batt. If this change takes place and the selling price per ball remains constant or $25.00, what will be next year's CM ratio and the break-even point in bahs? 3 Refer to the data in 121 above If the expected change in variable expenses takes place how many balls will have to be sold next ZA