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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

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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 format income statement follows: Percent of Amount Sales Sales 124,000 49,600 100 40 Variable expenses Contribution margin 60% 74,400 Fixed expenses 16,000 Net operating income $58,400 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 16% increase in sales. 3. Construct a new contribution format income statement for the company assuming a 16% increase in sales

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