Engberg Company installs lawn sod in home yards. The companys most recent monthly contribution format income statement follows:

	Amount			Percent of Sales
Sales	$	120,000		100	%
Variable expenses		48,000		40	%
Contribution margin		72,000		60	%
Fixed expenses		19,000
Net operating income	$	53,000

Required:

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 26% increase in sales.

3. Construct a new contribution format income statement for the company assuming a 26% increase in sales.

Required 1 Required 2 Required 3 What is the company's degree of operating leverage? (Round your answer to 2 decimal places.) Degree of operating leverage Required 1 Required 2 Required 3 Using the degree of operating leverage, estimate the impact on net operating income of a 26% 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 by % Required 1 Required 2 Required 3 Construct a new contribution format income statement for the company assuming a 26% increase in sales. Engberg Company Contribution Income Statement Amount Percent of Sales % % O 0 % $ $ 0