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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
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 Amount $ 150,000 Percent of Sales 100% 50,000 90,000 40 60% Sales Variable expenses Contribution margin Fixed expenses Net operating income. Required: 19,000 $ 71,000 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 25% increase in Snit sales. 3. Construct a new contribution format income statement for the company assuming a 25% increase in unit sales. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Construct a new contribution format incom its Skipped ebook Print variable expenses Contribution margin Fixed expenses Net operating income Required: 60,000 40 90,000 60% 19,000 $ 71,000 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 25% increase in unit sales. 3. Construct a new contribution format income statement for the company assuming a 25% increase in unit sales. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What is the company's degree of operating leverage? (Round your answer to 2 decimal places.) Degree of operating leverage 1.27 Required 2 > 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 25% increase in unit sales. 3. Construct a new contribution format income statement for the company assuming a 25% Increase in unit sales. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Using the degree of operating leverage, estimate the impact on net operating income of a 25% increase in unit sales. (Round your Intermediate calculations to 2 decimal places. Round your percentage answer to 2 decimal places (ie .1234 should be entered as 12.34).) Net operating income by % 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 25% increase in unit sales. 3. Construct a new contribution format income statement for the company assuming a 25% increase in unit sales. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Construct a new contribution format income statement for the company assuming a 25% increase in unit sales. Engberg Company Contribution Income Statement Amount Percent of Sales % % 0 0% S 0
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