Engberg Company installs lawn sod in home yards. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income Amount $ 123,000 49,200 73,800 17.000 $ 56,800 Percent of Sales 1009 409 609 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 18% increase in unit sales. 3. Construct a new contribution format income statement for the company assuming a 18% 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 18% increase in unit sales. Engberg Company Contribution Income Statement Amount Percent of Sales % % % Exercise 6A-1 (Algo) High-Low Method (L06-10) The Cheyenne Hotel in Big Sky, Montana, has accumulated records of the total electrical costs of the hotel and the number of occupancy-days over the last year. An occupancy-day represents a room rented for one day. The hotel's business is highly seasonal, with peaks occurring during the ski season and in the summer. Occupancy Electrical Month Days Costs January 3,400 $ 9,536 February 4.150 $ 10,180 March 3,080 $ 9, 184 April 2,230 $ 7.136 May 1.570 $ 5,024 June 1,910 56,112 July 3,880 $ 9,997 August 3,830 $ 9,904 September 2,060 $ 6,592 October 1,940 $ 6,208 November 1,050 $ 3,360 December 2,710 $ 8,168 5 Required: 1. Using the high-low method, estimate the fixed cost of electricity per month and the variable cost of electricity per occupancy-day. (Do not round your intermediate calculations. Round your Variable cost answer to 2 decimal places and Fixed cost element answer to nearest whole dollar amount.) Variable cost of electricity Fixed cost of electricity per occupancy-day per month 2. What other factors in addition to occupancy-days are likely to affect the variation in electrical costs from month to month? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.) 2 Systematic factors like guests, switching off fans and lights 2 Number of days present in a month 2 Income taxes paid on hotel Income. 2 Seasonal factors like winter or summen 2 Fixed salary paid to hotel receptionist
