Answered step by step
Verified Expert Solution
Question
1 Approved Answer
9. value: 0.75 points Engberg Company installs lawn sod in home yards. The company's most recent monthly contribution format income statement follows: Sales Variable expenses
9. value: 0.75 points 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% 60% Contribution margin Fixed expenses 88,800 18,000 Net operating income $ 70,800 Required: 1. Compute the company's degree of operating leverage. (Round your answer to 2 decimal places.) Degree of operating leverage 1.25 2. Using the degree of operating leverage, estimate the impact on net operating income of a 15% increase in sales. (Round your intermediate calculations to 2 decimal places. Round your percentage answer to 2 decimal places (i.e.1234 should be entered as 12.34).) Net operating income increases by 18.75 % 3. Construct a new contribution format income statement for the company assuming a 15% increase in sales. Engberg Company Contribution Income Statement Total Sales $ 148,015 Variable expenses 59,206 Contribution margin 88,809 Fixed expenses 53,285 Net operating income $ 35,524
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started