1-3 Sun Moon Company installs home theater systems. The company's most recent monthly contribution format income statement appears below: Amount Percent of Sales Sales ... $120,000 100% 84,000 70% Variable expenses Contribution margin. $36,000 30% Fixed expenses.. 24,000 Net operating income. $12,000 Required: i) Compute the company's i) Break event point in dollar ii) Degree of operating leverage. ii) Using the degree of operating leverage, estimate the impact on net operating income of a 10% increase in sales. iii) Verify your estimate from part (2) above by constructing a new contribution format income statement for the company assuming a 10% increase in sales. Solution HW Hints [ Expected NOI = 12000*130% = 15600. Now prepare anew income statement]