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# Northwood company

by | Oct 28, 2021 | Homework Help

Northwood company manufactures basketballs. the company has a ball that sells for \$42. at present the ball is manufactured in a small plant that relies heavily on direct labor workers. Thus variable costs are high, totalling \$22.89 per skateboard, of which 54.50% is direct labor costs. a) Compute the CM ratio and break even point in balls. CM? Unit sales to break even?b) computer hte degre of operating leverage at last year’s sales level?Due to an increase in labor rates, teh company estimates that variable costs will increase by \$6 per ball next year. If this change takes place and the selling price per ball remains constant at \$42, what will be the new CM ratio and the break-even point in balls?Due to an increase in labor rates, the company estimates that variable costs will increase by \$6 per ball next year. If the expected change in variable costs takes place, how many balls will have to be sold next year to earn the same net operating income (\$158,613) at last year?Due to an increase in labor rates, the company estimates that variable costs will increase by \$6 per ball next year. The president has decided that the company may have to raise the selling price of its balls. If Northwood Company wants to maintain the same CM ratio as last year, what selling price per ball must it charge next year to cover the increased labor costs?Refer to the original data, the company is discussing the construction of a new, automated plant. The new plant would slash variable costs by 40%, but it would cause fixed costs to increase by 80%. If the new plant is built, what would be the company’s new CM ration and new breakeven point in balls?The company is discussing the construction of a new, automated plant. The new plant would slash variable costs by 40% but it would casue fixed costs to increase by 80%. IF the new plant is built, what would be the company’s new CM ratio and new breakeven point in balls?

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