Northwood Company manufactures basketballs. The company has a
ball that sells for $32. At present, the ball is manufactured in a
small plant that relies heavily on direct labor workers. Thus,
variable expenses are high, totaling $22.00 per ball, of which 69%
is direct labor cost.
Last year, the company sold 30,000 of these balls, with the
following results:
Sales (30,000
balls)
$
960,000
Variable expenses
660,000
Contribution margin
300,000
Fixed expenses
210,000
Net operating income
$
90,000
Required:
1....