Amount	Percent of Sales
Sales	$137,000	100%
Variable expenses	54,800	40%
Contribution margin	82,200	60%
Fixed expenses	17,700
Net Operating	$65,200

1. What is the companys degree of operating leverage?

2. Using the degree of operating leverage, estimate the impact on net operating income of a 12% increase in sales.

3. Construct a new contribution format income statement for the company assuming a 12% increase in sales.