Variable expenses

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 labour workers. Thus, variable expenses are high, totaling $15 per ball, of which 60% is direct labour cost. Last year, the company sold 30000 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 15 90,000Required: 1—a. Compute last year‘s CM ratio and the break—even point in balls. Unit sales to break even

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