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

Amount Percent of Sales

Sales $123,000 100%

Variable expenses 49,200 40%

Contribution margin 73,800 60%

Fixed expenses 24,000

Net operating income $49,800

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 10% increase in unit 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).)

• 3. Construct a new contribution format income statement for the company assuming a 10% increase in unit sales. (Please refer to the picture)

Net operating income 49,800 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 10% increase in unit sales. 3. Construct a new contribution format income statement for the company assuming a 10% increase in unit sales. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Construct a new contribution format income statement for the company assuming a 10% increase in unit sales. Engberg Company Contribution Income Statement Amount Percent of Sales % Administrative expenses 0 0 % Advertising Beginning merchandise inventory $ 0 Commissions Required 2 Required 3 > Cost of goods sold Depreciation Direct labor Direct materials Ending merchandise inventory Fixed expenses Indirect labor Indirect materials Purchases Sales Selling expenses