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

	Amount	Percent of Sale
Sales	$84,000	100%
Variable Expenses	$33,600	40
Contribution Margin	$50,400	60%
Fixed Expenses	$37,800
Net Operating Income	$12,600

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 8% increase in unit sales. Your answer should be a percentage.

3. Construct a new contribution format income statement for the company assuming a 8% increase in unit sales.