EXERCISE 6-9 Compute and Use the Degree of Operating Leverage LO6-8 Engberg Company installs lawn sod in home yards. The company's most recent monthly contribution for- mat 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 unit 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 unit sales. EXERCISE 6-10 Multiproduct Break-Even Analysis LO6-9 Lucido Products markets two computer games: Claimjumper and Makeover. A contribution format income statement for a recent month for the two games appears below: Claimjumper Makeover Total Sales . . . . $30,000 $70,000 $100,000 Variable expenses. . . 20,000 50,000 70,000 Contribution margin . $10,000 $20,000 30,000 Fixed expenses . . 24,000 Net operating income. $ 6,000 Required: 1. What is the overall contribution margin (CM) ratio for the company? 2. What is the company's overall break-even point in dollar sales