Question
Engberg Company installs lawn sod in home yards. The company's most recent monthly contribution format income statement follows: Percent of Amount Sales Sales. Variable
Engberg Company installs lawn sod in home yards. The company's most recent monthly contribution format income statement follows: Percent of Amount Sales Sales. Variable expenses Fixed expenses $ 143,000 100% 57,200 40% Contribution margin 85,800 60% 24,000 Net operating income $ 61,800 es 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 27% increase in unit sales. 3. Construct a new contribution format income statement for the company assuming a 27% increase in unit sales.
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