$3.$ Engberg Company installs lawn sod in home yards. The company$$s most recent monthly contribution format income statement follows:

Amount Percent of Sales

Sales $$96,000100\%$

Variable expenses $38,40040\%$

Contribution margin $57,60060\%$

Fixed expenses $46,080$

Net operating income $$11,520$

Required:

a$)$ What is the company$$s degree of operating leverage?

b$)$ Using the degree of operating leverage, estimate the impact on net operating income of a $10\%$ increase in unit sales.

c$)$ Construct a new contribution format income statement for the company assuming a $10\%$ increase in unit sales.