Northwood Company manufactures basketballs.
Northwood Firm manufactures basketballs. The corporate has a ball that sells for $35. At current, the ball is manufactured in a small plant that depends closely on direct labor staff. Thus, variable bills are excessive, totaling $21.00 per ball, of which 60% is direct labor value.Final yr, the corporate offered 41,00zero of those balls, with the next outcomes: Gross sales (41,00zero balls)$1,435,00zero Variable bills861,00zero Contribution margin574,00zero Fastened bills420,00zero Web working revenue$154,00zero Required:1-a. Compute the CM ratio and the break-even level in balls.(Don't spherical intermediate calculations. Spherical up your ultimate break even solutions to the closest complete quantity.)1-b. Compute the the diploma of working leverage eventually year’s gross sales stage.(Spherical your reply to 2 decimal locations.)2. On account of a rise in labor charges, the corporate estimates that variable bills will improve by $2.80 per ball subsequent yr. If this modification takes place and the promoting value per ball stays fixed at $35.00, what would be the new CM ratio and break-even level in balls?(Don't spherical intermediate calculations. Spherical up your ultimate break even solutions to the closest complete quantity.)three. Consult with the info in (2) above. If the anticipated change in variable bills takes place, what number of balls should be offered subsequent yr to earn the identical internet working revenue, $154,00zero, as final yr?(Don't spherical intermediate calculations. Spherical your reply to the closest complete unit.)four. Refer once more to the info in (2) above. The president feels that the corporate should elevate the promoting value of its basketballs. If Northwood Firm desires to keep up the identical CM ratio as final yr, what promoting value per ball should it cost subsequent yr to cowl the elevated labor prices?(Don't spherical intermediate calculations. Spherical your reply to 2 decimal locations.)5. Consult with the unique knowledge. The corporate is discussing the development of a brand new, automated manufacturing plant. The brand new plant would slash variable bills per ball by 30%, however it might trigger fastened bills per yr to extend by 76%. If the brand new plant is constructed, what could be the company’s new CM ratio and new break-even level in balls?(Don't spherical intermediate calculations. Spherical up your ultimate break even solutions to the closest complete quantity.)6. Consult with the info in (5) above.If the brand new plant is constructed, what number of balls should be offered subsequent yr to earn the identical internet working revenue, $154,00zero, as final yr?(Don't spherical intermediate calculations.)b-1. Assume the brand new plant is constructed and that subsequent yr the corporate manufactures and sells 41,00zero balls (the identical quantity as offered final yr). Put together a contribution format revenue assertion. (Don't spherical your intermediate calculations.)b-2. Compute the diploma of working leverage.(Don't spherical intermediate calculations and spherical your ultimate reply to 2 decimal locations.)