9

Engberg Company installs lawn sod in home yards. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Percent Amount of Sales $ 148,000 100% 59,200 40% Contribution margin Fixed expenses 60% 88,800 15,000 Net operating income $ 73,800 Required: 1. Compute the company's degree of operating leverage. (Round your answer to 2 decimal places.) Degree of operating loverage 2. Using the degree of operating leverage, estimate the impact on net operating income of a 22% increase in sales. (Round your intermediate calculations to 2 decimal places. Round your percentage answer to 2 decimal places (.e.1234 should be entered as 12.34).) Net operating income 3. Construct a new contribution format income statement for the company assuming a 22% increase in sales. Engberg Company Contribution Income Statement Total