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

	Amount	Percent of Sales
Sales	$	125,000	100%
Variable expenses		50,000	40%
Contribution margin		75,000	60%
Fixed expenses		20,000
Net operating income	$	55,000

What is the degree of operating leverage?

Using the degree of operating leverage, estimate the impact on net operating income of a 29% increase in sales?

Construct a new contribution format income statement for the company assuming a 29% increase in sales.