Exercise 6-9 Compute and Use the Degree of Operating Leverage (L06-8) Engberg Company installs lawn sod in home yards. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income Amount $ 146,000 58,400 87,600 20.000 $ 67,600 Percent of Sales 1000 401 600 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 23% increase in sales. 3. Construct a new contribution format income statement for the company assuming a 23% increase in 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 1.24 Rene Required 2 > Exercise 6-9 Compute and Use the Degree of Operating Leverage (L06-8) Engberg Company installs lawn sod in home yards. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income Amount $ 146,000 58,400 87,600 20,000 $ 67,600 Percent of Salen 1000 401 600 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 23% increase in soles. 3. Construct a new contribution format income statement for the company assuming a 23% increase in 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 23% Increase in sales. (Do not round Intermediate calculations. Round your percentage answer to 2 decimal places (le 0.1234 should be entered as 12.34).) Net operating income increases by 24.80% Engberg Company installs lawn sod in home yards. The company's most recent monthly contribution format income statement follows: Percent of Sales 1000 400 Sales Variable expenses Contribution margin Fixed expenses Net operating income Amount $ 146,000 58.400 87,600 20,000 $ 67,600 600 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 23% increase in sales. 3. Construct a new contribution format income statement for the company assuming a 23% increase in 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 23% increase in sales. Engberg Company Contribution Income Statement Amount Percent of Sales Sales $ 175.200 100% Variable expenses 70,080 401% Contribution margin 105,120 60% Fixed expenses 17,000 Net operating income $ 88,120
