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Business, 21.03.2020 10:31 corbeansbrain

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 per ball, of which 60% is direct labor cost.

Last year, the company sold 30,000 of these balls, with the following results:
Sales (30,000 balls) $ 750,000
Variable expenses 450,000
Contribution margin 300,000
Fixed expenses 210,000
Net operating income $ 90,000

Required:

a. Compute the CM ratio and the break-even point in balls.

b. Compute the the degree of operating leverage at last year

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