Question
Engberg Company installs lawn sod in home yards. The companys most recent monthly contribution format income statement follows: Amount Percent of Sales Sales $ 123,000
Engberg Company installs lawn sod in home yards. The companys 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 | 23,000 | |
Net operating income | $ 50,800 |
Required:
1. What is the companys degree of operating leverage?
- Required 3
What is the companys degree of operating leverage? (Round your answer to 2 decimal places.)
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2. Using the degree of operating leverage, estimate the impact on net operating income of a 22% increase in unit sales.
Using the degree of operating leverage, estimate the impact on net operating income of a 22% 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).)
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3. Construct a new contribution format income statement for the company assuming a 22% increase in unit sales.
Construct a new contribution format income statement for the company assuming a 22% increase in unit sales.
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