50.1K

Verified Solution

Link Copied!

help

Complete this question by entering your answers in the tabs below. Refer to the data in requirement 2. If the expected change in variable expenses takes place, how many balls will have to be sold next year to eam the same net operating income, $92,200, as last year? (Round your answer up to the nearest whole Unit.) Complete this question by entering your answers in the tabs below. Refer to the original data. The company is discussing the construttion of a new, automated manufacturing plant. The new plant would slash variable expenses per ball by 40.00%, but it would cause fixed expenses per year to double. If the new plant is bulit, what would be the company's new CM ratio and new break-even point in balls? (Round "CM ratio" to 2 decimal places and round "Unit soles to break even" up to the nearest whole unit.) Complete this question by entering your answers in the tabs below. Refer to the data in requirement 5 . If the new plant is bulit, how many balls will have to be sold next year to earn the same net operating income, $92,200, as last year? (Round your answer up to the nearest whole unit.) Complete this question by entering your answers in the tabs below. Due to an increase in labor rates, the company estimates that next year's variable expenses will increase by $3.00 per ball. If this change takes place and the selling price per ball remains constant at $25.00, what will be next year's CM ratio and the break-even point in balls? (Round " CM ratio" to 2 decimal places and round "Unit sales to break even" up to the nearest whole unit.) year). Prepare a contribution format income statement and compute the degree of operating leverage. Complete this question by entering your answers in the tabs below. Refor again to the data in requirement 2. The president feels that the company must raise the selling price of its basketbalis. If Northwood Company wants to maintain the same CM ratio as last yoar (as computed in requirement 1a), what selling price per ball must it charge next year to cover the increased labor costs? (Round your answer to 2 decimal places.) Problem 6-20 (Algo) CVP Applications: Break-Even Analysis; Cost Structure; Target Sales [LO6-1, LO6-3, LO6-4, LO6-5, LO6-6, LO6-8] Northwood Corhpany manufactures basketballs. The company has a ball that selis for $25. At present, the ball is manufactured in a small plant that relies heavily on direet 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 resuits: Requiced: 1. Compute (o) last year's CM ratio 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 ball. If this change takes place and the selling price per ball remains constant at $25.00, what will be next year's CM ratio and the break-even point in balls? 3. Refer to the data in requirement 2 . If the expected change in variable expenses takes place, how many balls will have to be sold next year to earn the same net operating income, $92,200, as last year? 4. Refer again to the data in requirement 2 . The president feels that the company must raise the selling price of its basketballs. If Northwood Company wants to maintain the same CM ratio as last year (as computed in requirement 10), what selling price per ball must it charge next year to cover the increased labor costs? 5. Refer to the original data. The company is discussing the construction of a new, automated manufacturing plant. The new plant would slash variable expenses per ball by 40.00%, but it would cause fixed expenses per year to double. Ht the new plant is bulit what would be the company's new CM ratio and new break-even point in balls? 6. Refer to the data in requirement 5 . a. If the new plant is bulit, how many balls will hove to be sold next year to earn the same net operating income, $92,200, as last yoar? b. Assume the new plant is bult and that next year the company manufoctures and sels 30,500 balts (the same number as soid last year). Prepare a contribution format income statement and compute the degree of operating leverage. 6. Refer to the data in a. If the new plant is bulit, how many balls will have to be sold next year to earn the same net operating income, $92,200, as last year? b. Assume the new plant is bulit and that next year the company manufactures and selis 30,500 balls (the same number as sold last year). Prepare a contribution format income statement and compute the degree of operating leverage. Complete this question by entering your answers in the tabs below. Compute (o) last year's CM ratio and the break-even point in balis, and (b) the degree of operating leverago of last year's: sales level. (Round "Unit sales to brnak even" up to the nearest whole unit and other answers to 2 decimal places.). Complete this question by entering your answers in the tabs below. Refer to the data in requirement 5 . Assume the new plant is bulle and that next year thelcompany manufactures and sells 30,500 balls (the same number as sold last year). Prepare a contribution format income statement and compute the degree of operating leverage. (Round "Degree of operating leverage" to 2 decimal places.)

Answer & Explanation Solved by verified expert

See Answer