Engberg Company installs lawn sod in home yards. The companys most recent monthly contribution format income statement follows: AmountPercent of SalesSales$ 98,000100%Variable expenses39,20040Contribution margin58,80060%Fixed expenses45,080 Net operating income$ 13,720

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 6% increase in unit sales.

3. Construct a new contribution format income statement for the company assuming a 6% increase in unit sales.