BRIEF EXERCISE 8-10 Computing and using the Degree of Operating Leverage [LO2 - CC10] Engberg Company's most recent monthly income statement is given below: Amount Percentage of Sales Sales $96,000 100 Less: Variable expenses 57.600 60 Contribution margin 38,400 40 Less: Fixed expenses 28.000 Net income $10,400 Required: V 1. Compute the company's degree of operating leverage. 2. Using the degree of operating leverage, estimate the impact on net income of a 10% decrease in sales. 3. Verify your estimate from part (2) by constructing a new income statement for the company assuming a decrease in sales. noisM mo