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Engberg Company installs lawn sod in home yards. The companys most recent monthly contribution format income statement follows: Amount Percent of Sales Sales $ 131,000

Engberg Company installs lawn sod in home yards. The companys most recent monthly contribution format income statement follows:

Amount Percent of Sales
Sales $ 131,000 100 %
Variable expenses 52,400 40 %
Contribution margin 78,600 60 %
Fixed expenses 18,000
Net operating income $ 60,600

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 23% increase in sales.

3. Construct a new contribution format income statement for the company assuming a 23% increase in sales.

What is the companys degree of operating leverage? (Round your answer to 2 decimal places.)

Degree of operating leverage

Using the degree of operating leverage, estimate the impact on net operating income of a 23% increase in 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).)

Net operating income by %

Construct a new contribution format income statement for the company assuming a 23% increase in sales.

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

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