EXERCISE 6-9 Compute and Use the Degree of Operating Leverage [L08] Engberg Company installs lawn sod in home yards. The company's most recent monthly contribu- tion 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: 2. Compute the company's degree of operating leverage. Using the degree of operating leverage, estimate the impact on net operating income of a 5% increase in sales. Verify your estimate from part (2) above by constructing a new contribution format income statement for the company assuming a 5% increase in sales.