Exercise 5-9 (Algo) Compute and Use the Degree of Operating Leverage [LO5-8] Engberg Company installs lawn sod in home yards. The company's most recent monthly contribution format income statement follows Sales Variable expenses Contribution margin Fixed expenses Net operating income Required: Amount Percent of Sales $ 135,000 100% 54,000 40 81,000 60% 17,000 $ 64,000 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 16% increase in unit sales 3. Construct a new contribution format income statement for the company assuming a 16% increase in unit sales