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

		Amount	Percent of Sales
Sales	$	128,000	100%
Variable expenses		51,200	40%
Contribution margin		76,800	60%
Fixed expenses		23,000
Net operating income	$	53,800

Required:

1. Compute the companys degree of operating leverage. (Round your answer to 2 decimal places.)

2. Using the degree of operating leverage, estimate the impact on net operating income of a 17% 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).)

3. Construct a new contribution format income statement for the company assuming a 17% increase in sales.