Northwood Company manufactures basketballs. The company has a ball that sells for $25 At present, the...
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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 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 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
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Related Book For
Managerial Accounting
ISBN: 978-0697789938
13th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
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