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, totalling $15.00 per ball, of which 60% Is direct labor cost Last year, the company sold 62000 of these ballis, with the following results: Sales (62,000 balls) Variable expenses Contribution margin Fixed expenses $ 1,55e,eee 930,000 620,000 426, 000 194, 000 Net operating incone Required: 1. Compute (a) last year's CM ratio and the break-even polnt 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 polnt in balls? 3. Refer to the data in (2) above. If the expected change in varlable expenses takes place, how many balls will have to be sold next year to eam the same net operating income. $194,000, as last year? 4. Refer agaln to the data in (2) above. The president feels that the company must raise the selling price of Its basketballs. If Northwood Company wants to malntain the same CM ratio as last year (as computed in requirement 1a), what selling price per ball must t 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 varlable expenses per ball by 40.00%, but It would cause fixed expenses per year to double. If the new plant is built, what would be the company's new CM ratio and new break-even point in balls? 6. Refer to the data in (5) above. a. If the new plant is bult, how many balls will have to be sold next year to earn the same net operating Income. $194,000, as last year? b. Assume the new plant is bult and that next year the company manufactures and sells 62,000 balls (the same number as sold last year). Prepare a contribution format Income statement and compute the degree of operating leverage.

Daily Kneads, Inc., is considering outsourcing one of its many products rather than making it internally. The supplier will charge $20,000 for 20,000 pounds of the product. The costs per pound to make this product include: Cost per Pound $0.30 Direct Labor Direct Materials $0.60 $0.70 Allocated Unavoidable Overhead If Daily Kneads outsources, what is the savings (or loss) per pound for the company as a whole? If the amount is a loss include a negative sign (not parentheses) in your answer. "_"

4 Lowwater Sailmakers manufactures sails for sailboats. The company has the capacity to produce 25,000 sails per year, but is currently producing and selling 20,000 sails per year. The following information relates to current production. If a special sales order is accepted for 4,500 sails at a price of $120 per unit, and fixed costs remain unchanged, how would operating income be affected? (NOTE: Assume regular sales are not affected by the special order.) Sale price per unit $150 Variable costs per unit: Manufacturing Marketing and administratrve $60 $20 Total fixed costs: Manufacturing Marketing and administrative $600,000 S200,000 Increase by $160,000 ) Increase by $150,000 ) Increase by $140,000 Increase by S170,000 ) Increase by S180,000 ()

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 34,000 of these balls, with the following results:       Sales (34,000 balls) $ 850,000 Variable expenses   510,000 Contribution margin   340,000 Fixed expenses   212,000 Net operating income $ 128,000     Required: 1. Compute (a) 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 (2)…

Maple Enterprises sells a single product with a selling price of $75 and variable costs per unit of $30. The company’s monthly fixed expenses are $22,500.A. What is the company’s break-even point in units?B. What is the company’s break-even point in dollars?C. Construct a contribution margin income statement for the month of September when they will sell 900 units.D. How many units will Maple need to sell in order to reach a target profit of $45,000?E. What dollar sales will Maple need in order to reach a target profit of $45,000?F. Construct a contribution margin income statement for Maple that reflects $150,000 in sales volume.

Last year, Bread City had sales of 70,000 loaves resulting in revenues of $350,000. Variable costs were $3.50 per loaf, and fixed costs were $90,000. How many loaves must the company sell to earn $30,000?

Bridgeport Racers makes bicycles. It has always purchased its bicycle tires from the Cullumber Tires at $26 each but is currently considering making the tires in its own factory. The estimated costs per unit of making the tires are as follows: Direct materials   $9   Direct labor   $5   Variable manufacturing overhead   $8   The company’s fixed expenses would increase by $73,000 per year if managers decided to make the tire.(a1) Calculate total relevant cost to make or buy if the company needs 11,300 tires a year.   Make Buy Total relevant cost $enter a dollar amount  $enter a dollar amount  (a2) Ignoring qualitative factors, if the company needs 11,300 tires a year, should it continue to purchase them from Balyo or begin to produce them internally? The company select an option                                                           should not continueshould continue to purchase the tires.

A local toolmaker makes the best hammers on the market. The head of the hammer costs $15.56 and the handle costs $4.24. It takes 1.4 minutes to assemble the hammer and the hourly cost is $91 for assembly time. The company has fixed operating costs of $26348 per month. They sell the hammers for three times their total variable cost. The company wants to make a monthly profit of $8619. How many hammers must they sell? Round to the nearest whole number Answer:

Trey's Trucks uses a standard part in the manufacture of several of its trucks. The cost of producing 60,000 parts is $160,000, which includes fixed costs of $90,000 and variable costs of $70,000. The company can buy the part from an outside supplier for $3.30 per unit and avoid 30% of the fixed costs. If the company makes the part, how much will its operating income be? O A. $135,000 greater than if the company bought the part O B. $101,000 greater than if the company bought the part O C. $101,000 less than if the company bought the part O D. $135,000 less than if the company bought the part

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 56,000 of these balls, with the following results: Sales (56,000 balls) Variable expenses Contribution margin Fixed expenses $ 1,400,000 840,000 560,000 373,000 Net operating income $ 187,000 Required: 1. Compute (a) 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 (2) above. If the expected change in…