CM ratio = CM/Sales
= 560,000/1,400,000
=40%
Break point in Balls = Fixed costs/CM per unit
= 373,000/10
= 37,300 units
Degree of operating leverage = CM/Operating income
= 560,000/187,000
=2.9947
2.CM Ratio = (25-15-3)/25 = 28%
Break even point = 373,000/7 = 53,285.71 balls
3.Desired operating income = $187000
Add: Fixed costs = 373000
Desired contribution margin = $560,000
Number of balls = 560,000/7 = 80,000 balls
4.Selling price = Variable cost/Variable cost ratio
= 18/0.6 = $30
5.CM Ratio = (25-15*0.6)/25 = 64%
Break even point = 373,000*2/16
= 46,625 balls
6a. Balls to be sold = (187,000+746,000)/16
= 58312.5 balls
b.Income Statement
Sales 56,000*25 |
1,400,000 |
Variable expenses 56,000*9 |
504,000 |
Contribution Margin |
896000 |
Fixed costs |
746000 |
Operating income |
150,000 |
DOL = 896,000/150,000
= 5.9733
NOTE all are part of question 3 Northwood Company manufactures basketballs. The company has a ball...
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 52,000 of these balls, with the following results: Sales (52,000 balls) Variable expenses Contribution margin Fixed expenses Net operating income $ 1,300,000 780,000 520,000 321,000 $ 199,000 Required: 1....
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 dir labor cost Last year, the company sold 46,000 of these balls, with the following results: Sales (46,000 balls) Variable expenses Contribution margin Fixed expenses Net operating income $ 1,150,000 690,000 460,000 318,000 $ 142,000 Required: 1....
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) Variable expenses Contribution margin Fixed expenses Net operating income $750,000 450,000 300,000 210,000 $ 90,000 Required: 1. Compute...
Please help with part 5, 6a and 6b.
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 Net operating income $...
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 52,000 of these balls, with the following results: Sales (52,800 balls) Variable expenses Contribution margin Fixed expenses Net operating income $ 1,300,000 780,000 520,000 321.000 $ 199,000 Required: 1....
16 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. olnts Last year, the company sold 46,000 of these balls, with the following results: eBook Print Sales (46,000 balls) Variable expenses Contribution margin Fixed expenses Net operating income $ 1,150,000 690,000 460,000 318,000...
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 36,000 of these balls, with the following results: $ Sales (36,000 balls) Variable expenses Contribution margin Fixed expenses Net operating income 900,000 540,000 360,000 263,000 97,000 Required: 1. Compute...
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 44,000 of these balls, with the following results: Sales (44,000 balls) Variable expenses Contribution margin Fixed expenses Net operating income $ 1,100,000 660,000 440,000 317,000 $ 123,000 Required: 1....
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 44,000 of these balls, with the following results: Sales (44,000 balls) Variable expenses Contribution margin Fixed expenses Net operating income $ 1,100,000 660,000 440,000 317,000 $ 123,000 Required: 1....
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 42,000 of these balls, with the following results 11 Sales (42,000 balls) Variable expenses Contribution margin Fixed expenses Net operating income $ 1,050,000 630,000 420,000 266,800 $ 154,000 at...