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 $45,120$

Net operating income $ $12,480$

Required:

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

Using the degree of operating leverage, estimate the impact on net operating income of a $6\%$ increase in unit sales.

Construct a new contribution format income statement for the company assuming a $6\%$ increase in unit sales.