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

	Amount	Percent of Sales
Sales	$ 148,000	100%
Variable expenses	59,200	40
Contribution margin	88,800	60%
Fixed expenses	24,000
Net operating income	$ 64,800

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 11% increase in unit sales.

3. Construct a new contribution format income statement for the company assuming a 11% increase in unit sales.

Miller Companys contribution format income statement for the most recent month is shown below:

	Total	Per Unit
Sales (43,000 units)	$ 301,000	$ 7.00
Variable expenses	172,000	4.00
Contribution margin	129,000	$ 3.00
Fixed expenses	42,000
Net operating income	$ 87,000

Required:

(Consider each case independently):

1. What is the revised net operating income if unit sales increase by 18%?

2. What is the revised net operating income if the selling price decreases by $1.10 per unit and the number of units sold increases by 21%?

3. What is the revised net operating income if the selling price increases by $1.10 per unit, fixed expenses increase by $7,000, and the number of units sold decreases by 4%?

4. What is the revised net operating income if the selling price per unit increases by 10%, variable expenses increase by 30 cents per unit, and the number of units sold decreases by 9%?