Engberg Company installs lawn sod in home yards. The companys most recent monthly contribution format income statement follows: Amount Percent of Sales Sales $ 134,000 100 % Variable expenses 53,600 40 % Contribution margin 80,400 60 % Fixed expenses 16,000 Net operating income $ 64,400 Required: 1. What is the companys degree of operating leverage? 2. Using the degree of operating leverage, estimate the impact on net operating income of a 17% increase in sales. 3. Construct a new contribution format income statement for the company assuming a 17% increase in sales.

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

Engberg Company
Contribution Income Statement
	Amount	Percent of Sales
			%
			%
	0	0	%
	$0