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Engberg Company Installs lawn sod in home yards. The company's most recent monthly contribution format income statement follows: Amount Percent of Sales Variable expenses
Engberg Company Installs lawn sod in home yards. The company's most recent monthly contribution format income statement follows: Amount Percent of Sales Variable expenses Contribution margin Tixed expenses Net operating incone Sales $ 129,000 100% 51,600 40% 77,400 60% 18,000 $ 59,400 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 11% increase in sales. 3. Construct a new contribution format income statement for the company assuming a 11% increase in sales.
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