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 costs are high, totaling $15 per ball, of which 60% is direct labor costs.

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

Compute (i) the CM ratio and the break-even point in balls, and (ii) the degree of operating leverage at last year's sales level.

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Northwood Company manufactures basketballs

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