Engberg Company installs lawn sod in home yards. The company's most recent monthly contribution format income statement follows: Sales: Variable expenses Contribution margin Fixed expenses Percent of Amount Sales $ 86,000 34,400 100% 40 51,600 608 39,560 $ 12,040 Net operating income Required: 1. What is the company's degree of operating leverage? 2. Using the degree of operating leverage, estimate the impact on net operating income of a 7% increase in unit sales. 3. Construct a new contribution format income statement for the company assuming a 7% increase in unit sales.