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Exercise 9 (Degree of Operating Leverage) Franda Company installs home theater systems. The company's most recert monthly contribution format income statement appears belo AmountPercent of

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Exercise 9 (Degree of Operating Leverage) Franda Company installs home theater systems. The company's most recert monthly contribution format income statement appears belo AmountPercent of Sales Selling price Variable expenses Contribution margin Fixed expenses Net operating income P120,000 84,000 36,000 24,000 P 12,000 100% 70% 30% Required: 1. Compute the company's degree of operating leverage. 2. Using the degree of operating leverage, estimate the impact on net operating income of a 10% increase in sales. 3. Verify your estimate from part (2) above by constructing a new contribution format income statement for the company assuming a 10% increase in sales

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