EXERCISE 5-9 Compute and Use the Degree of Operating Leverage L05-80 2 Engberg Company installs lawn sod in home yards. The company's most recent monthly contribution format income statement follows: Amount Percent of Sales Sales $80,000 100% Variable expenses 32,000 40% Contribution margin 48,000 60% Fixed expenses 38,000 Net operating income $ 10,000 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 5% increase in sales. 3. Verify your estimate from part (2) above by constructing a new contribution format income statement for the company assuming a 5% increase in sales