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

Amount Percent of Sales

Sales $122,000 100%

Variable expenses48,800 40%

Contribution margin73,200 60%

Fixed expenses 17,000

Net operating income$56,200

1-Compute the company's degree of operating leverage.(Round your answer to 2 decimal places.)

Degree of operating leverage_________________

2-Using the degree of operating leverage, estimate the impact on net operating income of a 21% increase in 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).)

net operating income increases or decreases by ___________%

3-Construct a new contribution format income statement for the company assuming a 21% increase in sales.

Engberg Company

Contribution Income Statement

(Blank) Total

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__________ Blank

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