Following is the income statement for Mueller Mufflers for the month of June 2018

Mueller Mufflers
Contribution Margin Income Statement
Month Ended June 30, 2018
Net Sales Revenue (260 units x $200)			$52,000
Variable Costs (260 units x $100)			26,000
Contribution Margin			26,000
Fixed Costs			9,000
Operating Income			$17,000

Requirement 1. Calculate the degree of operating leverage. (Round to four decimal places.) Select the labels and enter the amounts to calculate the degree of operating leverage for Mueller Mufflers.

	/		=	Degree of operating leverage
	/		=

Requirement 2. Use the degree of operating leverage calculated in Requirement 1 to estimate the change in operating income if total sales increase by 30%

(assuming no change in sales price per unit). (Round interim calculations to four decimal places and final answer to the nearest dollar.)

The estimated change in operating income will be $

.

Requirement 3. Verify your answer in Requirement 2 by preparing a contribution margin income statement with the total sales increase of 30%.

Mueller Mufflers
Contribution Margin Income Statement
Month Ended June 30, 2018
Net Sales Revenue
Variable Costs
Contribution Margin
Fixed Costs
Operating Income