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Engberg Company installs lawn sod in home yards. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Contribution margin Pixed expenses
Engberg Company installs lawn sod in home yards. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Contribution margin Pixed expenses Net operating income Amount $ 140,000 56,000 94,000 15,000 $69.000 Percent of Sales 1000 404 600 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 23% increase in unit sales. 3. Construct a new contribution format income statement for the company assuming a 23% increase in unit sales
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